Harbor Co$.$ has produced boat supplies for over $20$ years. The company

currently has a debt$-$equity ratio of $65$ percent and the tax rate is $24$

percent. The required return on the firm's levered equity is $13$ percent.

The company is planning to expand its production capacity. The

equipment to be purchased is expected to generate the following

unlevered cash flows:

The company has arranged a debt issue of $$9\mathrm{.}9$ million to partially

finance the expansion. Under the loan, the company would pay interest

of $6$ percent at the end of each year on the outstanding balance at the

beginning of the year. The company also would make year$-$end principal

payments of $$3,300,000$ per year, completely retiring the issue by the

end of the third year.

$-$ What is the value of the unlevered project $($VU$)?$

$-$ What is the value of the present value of interest tax shield PV$($ITS$)?$

$-$ What is the present value of the project $($VL$)?$

$-$ What is the net present value of the project $($NPV$)?$