Wilde Software Development has a 9% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 3% rate after Year 3. Wilde's tax rate is 25%.
Year 1 Year 2 Year 3 Interest expenses $85 $110 $140 a. What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. What is the total value of the interest tax shield at Year O? Do not round intermediate calculations. Round your answer to the nearest cent. $