What is the firm unlevered cost of capital

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Reference no: EM131337368

Value the tax shield

Your firm has a debt to equity ratio of 0.3 and next year’s cash flow should be 39 million which is growing at a 2% rate. The current debt cost of capital is 6%, the equity cost of capital is 20% and the appropriate tax rate is 35%.

A) What is the firm’s unlevered cost of capital?

B) What is the firm’s wacc given the current capital structure?

C) Solve for the firm’s present value of the tax shield.

Reference no: EM131337368

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