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a. 10.8 Iwacc 10%+ 14.4-10.8 E 14.4 14.4 6.1%(1-0.35) = 8.49% b. Using the WACC method, the levered value of the project at date 0

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a. 10.8 Iwacc 10%+ 14.4-10.8 E 14.4 14.4 6.1%(1-0.35) = 8.49% b. Using the WACC method, the levered value of the project at date 0 is VL = 50 100 + 70 1.0849 1.08492 + 1.08493 = 185.86. Given a cost of 100 to initiate, the project's NPV is 185.86 - 100 = 85.86

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