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A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). Note: A negative answer should be indicated by
A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). Note: A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars. a. If the firm invests, it has to raise $550,000 by a stock issue. Issue costs are 16.25% of net proceeds. What is the project's APV? b. If the firm invests, there are no issue costs, but its debt capacity increases by $550,000. The present value of interest tax shields on this debt is $81,000. What is the project's APV? a. Adjusted present value b. Adjusted present value
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