A small video chain is deciding whether to engage in a new line of delivery business, which implies setting up a page where customers could choose movies based on available in-store inventory and pick a time for delivery. The purpose of this analysis is to obtain an estimate of the net present value of this project, which requires an upfront investment of $800,000. Part of this amount will come from debt of $750,000 (held in perpetuity). Currently, Sampa Video, Inc. is unlevered. Assume that the cost of debt is 6.8%, the corporate tax is 40% and the return required by equity investors in the all-equity firm is 15.8%. Sampa Video, Inc. is planning to run the new line of delivery only for the next 5 years. The following financial information is available regarding the expected cash flows of the new line of delivery (in $ thousand

Projected (t=1)	Projected (t=2)	Projected (t=3)	Projected (t=4)	Projected (t=5)
delta (NWC)	0	0	0	0	0
Capital Expenditures	300	300	300	300	300
Depreciation	200	225	250	275	300
Revenue -Costs	180	360	585	840	1,125

Questions:

1. Calculate the unlevered present value

2. Calculate the present value of the expected interest tax shields

3. Calculate the APV.

4. Why is APV a preferable method to WACC in this situation? How do their assumptions differ?

Could you please explain the solution . i would really appreciate it . Thank you