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Longhorn, Incorporated, has produced rodeo supplies for over 2 0 years. The company currently has a debt - equity ratio of 6 0 percent and
Longhorn, Incorporated, has produced rodeo supplies for over years. The company currently has a debtequity ratio of percent and the tax rate is percent. The required return on the firms levered equity is percent. The company is planning to expand its production capacity. The equipment to be purchased is expected to generate the following unlevered cash flows:
Year Cash Flow
$
The company has arranged a debt issue of $ million to partially finance the expansion. Under the loan, the company would pay interest of percent at the end of each year on the outstanding balance at the beginning of the year. The company also would make yearend principal payments of $ per year, completely retiring the issue by the end of the third year. What is the APV of the project? Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to decimal places, eg
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