Amortized straight line over 15 years r d 14 τ c 34

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Amortized straight-line over 15 years. r D = 14%; τ C = 34%. FC = 0.02×40,000 = $800 Annual amortization = $800/15 How to discount tax shields from flotation costs? Assume they have the same risk as debt – you will cease to get them if you default on debt payments. A(15 yrs,14%) = [1-1/(1.14 15 )]/.14 = 6.1422 V 0 (FC) = -800 + (800/15)×.34×6.1422 = -$688.6 Lecture 9: APV
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