Question
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
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. If the firm invests, it has to raise $670,000 by a stock issue.
Issue costs are 19.25% of net proceeds. What is the projects APV?
If the firm invests, there are no issue costs, but its debt capacity increases by $670,000. The present value of interest tax shields on this debt is $93,000. What is the projects APV?
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International Financial Management
Authors: Jeff Madura, Roland Fox
4th Edition
147372550X, 9781473725508
