A firm will have free cash flows next year (FCF1) of $20,000…
A firm will have free cash flows next year (FCF1) of $20,000,000. The growth rate in FCF will be a constant 3% per year. The firm’s cost of debt, rD, is 5% and its cost of equity, rS, is 10%. The weights of debt and equity are 0.5 and 0.5. The firm’s tax rate is 21%. Calculate the value of the firm’s operations using the pre-tax WACC and the after-tax WACC. The difference will be the firm’s PV(ITS). What is this difference? Round your answer to the nearest dollar.