Part B:

Now, limagine that Company J finances the project with $$600,000,000$ of debt at $8\%.$ As such the company becomes a fevered firm due to its acquisition of debt. What do the debt and related interest expense mean for the APV of the project if the tax rate is $40\%$ Update your spreadshect model from above to demonstrate the effect of this debt on your decision. Complete the following lables. Round your answers to the nearest dollar and do not enter the $ symbol in your answers.

APV$={\displaystyle \underset{t=1}{\overset{T}{}}}(\frac{(OC{F}_t)(1-)}{(1+K_u{)}^t}+\frac{D_t}{(1+i{)}^t}+\frac{I_t}{(1+i{)}^t})+\frac{T{V}_T}{(1+K_u{)}^T}-C_0$

Parancters

Symbol

Value

Initial Outlay

$c_0$

Unlevered Equity Cost $x$

$K_U$

type your answer$-$

Years Project Life

T

$\%$

Terminsl Vatue

$[TV,$ type your $answe{r}_{}]$

Amount Borrowed

$s$

Tax Rote $\%$

Interest Rate $\%$

$1d$

$\%$

$\%$

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