The company wants to invest a project with the following cash flows:

Year 0 : -8000000 Year 1: 5250840 Year 2: 6250840

The firm has a corporate tax rate of 35 percent.The opportunity cost is 12 percent and the debt rate is 6 percent.

Calculate the APV at Year 0 assuming that in every year the optimal debt capacity of the firm is increased by 30 percent of the projects base-case PV and this is the only financing side effect.

The question does not provide details about equity and debt sharings, so I think WACC might not work. Maybe should use APV = base-case NPV + PV(tax shield) ?