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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
Flagstaff Enterprises is expected to have free cash flows in the coming year of $8 million, and this free cash flow is expected to grow at a rate of 3% per year thereafter. Flagstaff has an equity cost of capital of 13%, a debt cost of capital of 7%, and is in the 35% corporate tax bracket.
(d) If Flagstaff currently maintains a .5 debt to equity ratio, then the value of Flagstaff as a levered firm is closest to:
(1) $114 million
(2) $100 million
(3) $111 million
(4) $140 million
(e) If Flagstaff currently maintains a .5 debt to equity ratio, then the value of Flagstaff’s interest tax shield is closest to:
(1) $11 million
(2) $18 million
(3) $10 million
(4) $24 million
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