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Consider a project lasting one year only. The initial outlay is $1,000, and the expected inflow is $1,200. The opportunity cost of capital is r=0.20.
Consider a project lasting one year only. The initial outlay is $1,000, and the expected inflow is $1,200. The opportunity cost of capital is r=0.20. The borrowing rate is ro = 0.10, and the tax shield per dollar of interest is 7c = 0.21. (Do not round intermediate calculations. Round your answers to 2 decimal places. (Leave no cells blank - be certain to enter "O" wherever required.)) a. What is the project's base-case NPV? Answer is complete and correct. Base-case Net present value $ 0.00 b. What is its APV if the firm borrows 30% of the project's required investment? Answer is complete but not entirely correct. Adjusted present value $ 8.75 X
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