7. Hansen Electricals is evaluating a capital project requiring an outlay of Rs.1900 million. It is expected to generate a net cash inflow of Rs.600 million per year for 5 years. The opportunity cost of capital is 18 percent. Hansen Electricals can raise a term loan of Rs.800 million for the project, carrying an interest rate of 8 percent per year payable annually. The principal amount will be repayable in 4 equal annual instalments, the first instalment falling due at the end of the second year. The balance amount required for the project can be raised by issuing external equity. The issue cost is expected to be 10 percent. The effective tax rate for the company is 30 percent

a. What is the base case NPV?

b. What is the adjusted NPV if the adjustment is made only for the issue cost of external equity?

c. What is the present value of the tax shield?