AP-Vee Corp.s management is considering a new project in a different industry than that in which most of its operation occur. The project will require an initial investment of $1,500,000 and is expected to generate after-tax operating cash flows of $142, 500 per year into perpetuity. The required rate of return on assets in the projects industry is 10.0%, APVee can borrow at 8.0%, and the tax rate is 40.0%

a. Assume that the project will be partly financed with $600,000 of permanent debt. What is the projects adjusted present value? Show your work. Should AP-Vee undertake the project?

b. Assume instead that management wants to maintain a constant debt-to-value for the project of 0.383377. What is the projects adjusted present value? Show your work. Should AP-Vee undertake the project?

c. How would your answers to parts a. and b. change if the tax rate were 30.0%?