Ougadougu Developments is considering the acquisition of a shopping mall. Information about the property and its corresponding mortgage is available in the table below. Interest payments are tax deductible. Observe that there is an implied subsidy since the mortgages interest rate is lower than the prevailing rate for loans of comparable risk.

Calculate the adjusted Net Present Value (NPV) of the levered property. Mark the answer that best approaches the right result.

Remember: NPV of levered property = NPV of unlevered property + NPV of loans subsidy + NPV of loans tax shield.

Unlevered Property Year After Tax Free Cash Flow 0 4 1 80.00 2 80.00 3 80.00 -1500.00 3000.00 0 1 2 Mortgage Year Principal Installments (only interest) Before Tax Free Cash Flow 1000.00 3 4 -1000.00 -70.00 -70.00 -70.00 -1070.00 -70.00 -70.00 -70.00 -70.00 1000.00 7.00% Mortgage Interest Rate (yearly) Market Interest Rate (yearly) Discount Rate Property Corporate Tax Rate 9.00% 12.00% 30.00%