Use the Information for the Question(s)below

question 76

Essay

Use the information for the question(s)below.
Flagstaff Enterprises expected to have free cash flow 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 it has a 21% corporate tax rate.
-If Flagstaff currently maintains a .8 debt to equity ratio,then calculate the value of Flagstaff's interest tax shield.

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Definitions:

Connectedness

Consists of two dimensions: mutuality, sensitivity to and respect for others’ views; and permeability, openness to others’ views.

Obedience

The act of following instructions or complying with commands, norms, or laws.

Individualism

Giving priority to personal goals rather than to group goals; emphasizing values that serve the self, such as feeling good, striving for personal distinction and recognition for achievement, and asserting independence.

Interdependence

The mutual reliance between two or more entities, where each is dependent on the other for certain needs or outcomes.