1.Tolchester Marina invests in a project to improve its facilities. The upfront investment is $2.5 million. The improvements will lead to an increased operating cash flow of $225,000/year forever. The cost of capital is 10%. The base-case NPV of the project is:

2. Tolchester is able to borrow $2 million to finance the project. Its borrowing rate is 6%. Tolchester pays state and local taxes at 30%. If the debt is perpetual, the NPV of financing is:

3) The APV (adjusted present value) of Tolchester's project is:

4) Based on the APV of the project, Tolchester should accept the project:

5) Yesterday the value of Tolchester was $10 million. The firm invested in the project this morning at 9:00 am. Today, at 9:05 am, the value of the Tolchester is

6)The market value leverage ratio of Tolchester's project is: