Question: An all equity financed project has following information: Project lasts for 7 years; Initial capital spending is $1,500 ; Every year project will bring in

An all equity financed project has following information:

Project lasts for 7 years; Initial capital spending is $1,500 ; Every year project will bring in an after-tax cash flow of $475 ; The cost of all equity capital is 22% ; Firm's tax rate is 36% . What is the NPV of this all equity financed project?

Suppose firm finances the project with $725 of debt at 9% interest rate. What is annual interest tax shield ?

Continuing from part b, what is present value of all these years' interest tax shield from this project?

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