Question: Consider a project lasting one year only. The initial outlay is $1,300 and the expected inflow is $1,550. The opportunity cost of capital is r

Consider a project lasting one year only. The initial outlay is $1,300 and the expected inflow is $1,550. The opportunity cost of capital is r = .19. The borrowing rate is r_D = .09, and the tax shield per dollar of interest is T_c = .30

What is the projects base-case NPV?

Base-case NPV $

b. What is its APV if the firm borrows 33% of the projects required investment?

Adjusted present value $

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