Assume a project/firm that costs $300 today. This is a one-year project that earns 120 before taxes. The tax rate is 40%.

A. Assuming that the project is fully equity financed (i.e. no debt i.e. no interest payment) what is the value of this project today.

B. If the project if partially financed by debt of $200 at an interest of 11% what is the value of this project today? What is the proportion (aka the weight) of debt and equity here? Since the cost of capital for the entire firm is 10%, and the cost of debt is 11% (interest rate) what is the cost of equity? Use the simple WACC (non-tax adjusted WACC formula) to find the cost of equity.

C. In addition to Flow-of-Equity method use APV and tax-adjusted WACC method to find the value of the partially debt-financed project in part b.).