A project costs $1 million and has a base case NPV of exactly zero (NPV 0) (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 Adjusted present value 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 Adjusted present value

Question

A project costs $1 million and has a base case NPV of exactly zero (NPV   0)  (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  Adjusted present value 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  Adjusted present value

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A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). (A negative answer should be indicated by a minus

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