Question
Need help with the following practice question: Need to calculate APV-Adjusted present valuefor a project, initial investment in equipment is $95M, equipment fully depreciated with
Need help with the following practice question: Need to calculate APV-Adjusted present valuefor a project, initial investment in equipment is $95M, equipment fully depreciated with straight-line method over 5 years. EBIT from project $15M per year for 20 years starting from end of first year. Our corporate Tax is 21%. Required rate of return under all-equity financing 14.5%, The pretax cost of debt is 9.75%. $30M issued in bonds, bonds issued at par and pay coupon of 7.2%, 15 year maturity, principle paid back at end of year 15. Step by Step instructions to help me understand how the practice question is set up in order to arrive at APV is greatly appreciated,
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