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The investment of a 5-year project is $20,000. The EBIT is $7,000 per year for 5 year. The firm borrows $10,000 to finance the project
The investment of a 5-year project is $20,000. The EBIT is $7,000 per year for 5 year. The firm borrows $10,000 to finance the project and will repay the loan at the end of year 5. The tax rate is 20%, cost of debt is 5% and cost of unlevered equity is 7%. Calculate the NPV of the project using APV approach.
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