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3. Consider Table 2 Table 2 Year 3 Year 4 Cash flow Year 2 Year 0 Year 1 Cash flovw Cash flow Cash flow 70
3. Consider Table 2 Table 2 Year 3 Year 4 Cash flow Year 2 Year 0 Year 1 Cash flovw Cash flow Cash flow 70 Cash flow Project 80 70 30 -150 0.24 Interest Tax Shield 0.75 (a)Consider Table 2. Calculate the net present value of the project assuming it is all-equity financed. The required return on unlevered equity is 15%. (b)Consider Table 2. Assume for now that the project is financed using equal parts debt and equity. The cost of debt capital is 10%. Calculate the required return on levered equity and the (after-tax) weighted average cost of capital (WACC) (c)Consider Table 2. Assume for now that the project is financed using equal parts debt and equity. Using the (after-tax) weighted average cost of capital (WACC) approach, calculate the net present value of the levered project. (d)Consider Table 2. Assume for now that the project is financed using equal parts debt and equity. Calculate the adjusted present value (APV) of the levered project
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