Question
Consider a project lasting one year only. The initial outlay is $1,700 and the expected inflow is $2,100. The opportunity cost of capital is r
Consider a project lasting one year only. The initial outlay is $1,700 and the expected inflow is $2,100. The opportunity cost of capital isr= .20. The borrowing rate isrD= .11, and the tax shield per dollar of interest isTc= .30.(Leave no cells blank - be certain to enter "0" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
a.What is the projects base-case NPV?
Base-case NPV$
b.What is its APV if the firm borrows 50% of the projects required investment?
Adjusted present value$
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International Finance Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
10th edition
978-0133425895, 133425894, 978-0133423631, 133423638, 978-0133423648
