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QUESTION

Based on the attached spreadsheet (loosely based on the APV example in class), compute the fol- lowing with a 34% tax rate: (a) Firm value according

Based on the attached spreadsheet (loosely based on the APV example in class), compute the fol- lowing with a 34% tax rate: 

  1. (a)  Firm value according to APV where the present value of the interest tax shield is computed using Pre-tax WACC, not the cost of debt. (10 points) 
  2. (b)  Firm value according to CCF. (10 points) 

The APV and CCF valuations will be identical. Note that depreciation, CAPEX, and change in NWC are all zero.

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