Worldwide trousers is considering an expansion of their existing business. The incremental after-tax cash flows to the project are:

Year 0: $-25,500

Year 1: $5,500

Year 2: $7,500

Year 3: $8,500

Year 4: $10,000

The unlettered cost of equity is 10%. The corporate tax rate is 40%.

A. Calculate the NPV of the project if it is all equity financed.

B. Worldwide plans to issue a 4-year loan for $12,000 at an interest rate of 8% to partially finance the project. All principal will be repaid in one lump-sum at the end of the fourth year. Calculate the adjusted present value of the investment project.