sociated

with this project, suppose HomeNet sells the equipment early in

Year $4$ for $$3$ million.

Calculate the after$-$tax cash flow from the asset sale in Year $4$ and

adjust the NPV calculation accordingly. Assume the remaining book

value of the equipment is $$2$ million, and the marginal tax rate is

$35\%.$

Question $4.$ Now suppose Linksys considers to get financing for the

project alternatively. Discuss why they could prefer equity, bond

financing, or bank loans.