Question: Tax Shield Value Wilde Software Development has a 12% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at

Tax Shield Value

Wilde Software Development has a 12% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 5% rate after Year 3. Wilde's tax rate is 25%.

Year 1 Year 2 Year 3
Interest expenses $75 $95 $125

  1. What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent.

    $

  2. What is the total value of the interest tax shield at Year 0? Do not round intermediate calculations. Round your answer to the nearest cent.

    $

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