Question: A project ls expected to generate the perpetual alter-tax operating cash tlows of $10 millions. The initial investment is $100 million. This particular project will


A project ls expected to generate the perpetual alter-tax operating cash tlows of $10 millions. The initial investment is $100 million. This particular project will actually support to debt usage of $20 million. This debt has the maturity of seven years while the issuance cost is 3% of the face value. The borrowing rate for this project is 5% while the corporation tax rate is 30%. The rm's opportunity cost of capital is 10%. Also, the taking up of this project will force the rm to issue equity of $20 million with 8% issuance cost. Find the APV. Will the project add value to the company
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