4. A projects initial investment is $1 million at time t=0 and expected after-tax returns are $600,000 at time t=1 and $700,000 at time t=2. The project lasts for two years only. The opportunity cost of capital is 12% with all-equity financing, the borrowing rate is 8%, and the firm borrows $300,000 against the project. The debt will be repaid in two equal installments. The corporate tax rate is 35%.

a. What is the base case NPV?

b. What is the interest paid in each year?

c. What is the present value of the debt tax shields?

d. What is the value of the project?