11. Delhi Transport Company is intending to expand its fleet of trucks. It is considering buying 30 Tata trucks for 600 lakh. The company expects the fleet to have a useful life of six years and generate earnings before interest, taxes and depreciation of *120 lakh per year. Delhi Transport Company is a zero-debt company. Assume that the corporate tax rate is 34 per cent and straight-line depreciation is allowed for tax purposes. The company's all- equity opportunity cost of capital is 20 per cent.

(a) What is the NPV of the new fleet of trucks?

(b) Suppose that Delhi Transport Company will raise 5-year debt of 300 lakh at 10 per cent rate of interest per year. The principal will be paid entirely at the end of the sixth year. What is the project's APV?