1. You are engaged in an investment of a 3-year project that will cost you P350,000. The said project will have a cash flow of P250,000 in year 1, P300,000 in year 2 and P100,000 in year 3. The opportunity cost of capital is 15%. Calculate the Present Value and Net Present Value. After calculation, do you think you should continue the project? Why or Why not?
2. FVBJ Corporation borrowed a loan from a band with an interest of 12.5% and its tax rate is 35%. Calculate the after-tax cost of debt of FBJV Corporation.