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Need help with following picture The part with other info is in this picture (b). NBT Ltd plans to invest in a project with three
Need help with following picture
The part with other info is in this picture
(b). NBT Ltd plans to invest in a project with three years' life and will finance the initial investment using S3m debt plus $2m equity. NBT will repay $1 million debt at the end of each year until it is fully repaid. Other important information is provided in the table below. Calculate the adjusted present value (APV) of the project. (8 marks) cost of debt Asset beta (unlevered firm beta) Market risk premium Risk free interest rate Free cash flow (unlevered) 8% 1.2 6% 4% $3m 01) 112% PART B: SHORT PROBLEMS (30 Marks) Problem 1 (12 marks) (a). NIT is going to adjust its current Debt/Equity ratio from 1.5 to 2. Using the int below, calculate the cost of equity of NIT after the capital restructure. If D/E=1.5 If D/E=2 Cost of debt 6% 6.5% Cost of equity 12% ? Tax rate 30% 30%
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