Consider a project to produce water heater. It requires a $10M investment and offers after tax cash flow of $1.75M per year for 10 years. The cost of equity is 12% which reflects the project's business risk. a) Suppose the project is financed with $5M of debt and $5M of equity. Interest rate on debt is 8% and tax rate is 21%. An equal amount of debt will repaid in each year of the project's life. Calculate the APV for this project. Use debt rate to discount interest tax shield. b) How does APV change if the firm incurs issue costs of $400,000 to raise the original $5M of required equity? What is the new APV taking this cost into account