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pls answer in a excel format and include the formula!!! 2. Urban Solar (US) has the opportunity to invest $2.15 million now (t = 0)
pls answer in a excel format and include the formula!!!
2. Urban Solar (US) has the opportunity to invest $2.15 million now (t = 0) and expects after- tax cash flow of $1,500,000 in t = 1 and $1,800,000 in t = 2. The project will last for two years only. The opportunity cost of capital is 15% with all-equity financing, the borrowing rate is 7%, and US will borrow $1.8 million against the project. This debt must be repaid in two equal installments of $900,000 each. Assume the tax rate is 21%. A. Calculate the base case NPV of this project. B. What is the interest tax shield each year? C. Calculate the project's APV. D. If the firm incurs issue costs of $150,000 to raise the $1.8 million of required equity, what will be the APV? 2. Urban Solar (US) has the opportunity to invest $2.15 million now (t = 0) and expects after- tax cash flow of $1,500,000 in t = 1 and $1,800,000 in t = 2. The project will last for two years only. The opportunity cost of capital is 15% with all-equity financing, the borrowing rate is 7%, and US will borrow $1.8 million against the project. This debt must be repaid in two equal installments of $900,000 each. Assume the tax rate is 21%. A. Calculate the base case NPV of this project. B. What is the interest tax shield each year? C. Calculate the project's APV. D. If the firm incurs issue costs of $150,000 to raise the $1.8 million of required equity, what will be the APVStep by Step Solution
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