1. An all-equity firm is considering the purchase of a new machine for $8 million. The machine would generate annual earnings before taxes and depreciation of $3 million during its useful life of 5 years, and it would be fully depreciated on a straight-line basis over this period. The firm can partially finance the expenditure using a 5-year loan for $5 million. The principal balance would not be due until the very end of the loan period, but interest would be paid annually at the risk-free rate of 7%. The firms unlevered cost of equity is 14% and the corporate tax rate is 25%. What is the APV of this investment? a. $4,298,089.16 b. $1,723,278.43 c. $1,364,511.15 d. $1,005,743.88 e. $1,456,431.84