Goodyear is thinking of divesting one of the plants. The plant will generate free cash flows (FCF) of $3.8 million at the end of the first year and the cash flows will grow at 3%. The plant is financed with a debt of 50 million which is expected to remain constant. Goodyear has an equity cost of capital of 10% and a debt cost of capital of 6% and a marginal tax rate of 40%. Personal tax rates for marginal equity and debt investors are 10% and 15%. If the plant has an average risk similar to the whole firm, value the plant using the APV method. Assume a leverage ratio of 0.5.

**Correct answer is 94.125** Please show the work how to get to this answer as im so confused