Consider a project lasting 1 year only.
June 7th, 2024
Consider a project lasting 1 year only. The initial outlay is $1000 and the expected inflow is $1200. The opportunity cost of capital is ra=20%. The borrowing rate is rd=10%, and the net tax shield per dollar of interest is T*=.20.A.) What is the projects base case NPV? (show work)B.) What is its APV if the firm borrows 30% of the projects required investment? (show work)