You are evaluating a project that costs RM 5 million. The project is expected to generate free

cash flow of $1 million the first year, and this free cash flow is expected to be the same every

year. The levered equity cost of capital of 17%, the firm has a debt cost of capital of 5%, and

a tax rate of 40%. Your firm maintains a debt-equity ratio of 1.0

a) What is the NPV of the project including any tax shields from leverage?

b) How much debt will the firm initially take on as a result of the project?

c) What is the free cash flow to equity for this project?

d) What is its NPV computed using the FTE method? How does it compare with the NPV

based on the WACC method?

There is no value for Project Life (Years) given but the answer for Question a) RM 5mill b) 2.5mill c) RM 0.85 mil; d) RM 5 mill. I would like to know step by step cals to get the answers