Problem Start with the partial model in the file Ch21 P08 Build a Model xlsx on the textbooks Web site Kasperov Corporation has an unlevered cost of equity of 12 and is taxed at a 40 rate The 4 year forecasts of free cash flow and interest expenses are shown in the following table free cash flow and interest expenses are expected to grow at a 5 rate after Year 4 Using the compressed APV model, answer the following questions a Calculate the estimated horizon value of unlevered operations at Year 4 (i e , immediately after the Year 4 free cash flow) b Calculate the current value of unlevered operations c Calculate the estimated horizon value of the tax shield at Year 4 (i e , immediately after the Year 4 free cash flow) d Calculate the current value of the tax shield e Calculate the current total value INPUTS (In Millions) INPUTS (In Millions)

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Question: Problem Start with the partial model in the file Ch21 P08 Build a Model.xlsx on the textbooks Web site. Kasperov Corporation has an unlevered cost

Problem

Start with the partial model in the file Ch21 P08 Build a Model.xlsx on the textbooks Web site. Kasperov Corporation has an unlevered cost of equity of 12% and is taxed at a 40% rate. The 4-year forecasts of free cash flow and interest expenses are shown in the following table; free cash flow and interest expenses are expected to grow at a 5% rate after Year 4. Using the compressed APV model, answer the following questions.

Problem Start with the partial model in the file Ch21 P08 Build

a. Calculate the estimated horizon value of unlevered operations at Year 4 (i.e., immediately after the Year-4 free cash flow).

b. Calculate the current value of unlevered operations.

c. Calculate the estimated horizon value of the tax shield at Year 4 (i.e., immediately after the Year-4 free cash flow).

d. Calculate the current value of the tax shield.

e. Calculate the current total value.

INPUTS (In Millions) INPUTS (In Millions)

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