FOB Ltd. is considering an investment opportunity. It requires an initial investment of $4 million and is expected to receive after-tax cash flows of $2.2 million at the end of year 1 and $2.8 million in year 2. This investment is expected to last for two years only. The cost of capital is 12 percent if it is all-equity financed. FOB intends to borrow $1 million at an annual cost of 8 percent. The loan must be repaid in two equal annual instalments. The payments will occur at the end of each year. Assume FOB has a marginal corporate tax rate of 30 percent. Required: (a) Calculate the base-case NPV of this investment. (3 marks) (b) Calculate the adjusted present value (APV) of this investment. (10 marks) FOB Ltd. is considering an investment opportunity. It requires an initial investment of $4 million and is expected to receive after-tax cash flows of $2.2 million at the end of year 1 and $2.8 million in year 2. This investment is expected to last for two years only. The cost of capital is 12 percent if it is all-equity financed. FOB intends to borrow $1 million at an annual cost of 8 percent. The loan must be repaid in two equal annual instalments. The payments will occur at the end of each year. Assume FOB has a marginal corporate tax rate of 30 percent. Required: (a) Calculate the base-case NPV of this investment. (3 marks) (b) Calculate the adjusted present value (APV) of this investment. (10 marks)