Question: Consider a project lasting one year only. The initial outlay is $1,000 and the expected inflow is $1,200. The opportunity cost of capital is r

Consider a project lasting one year only. The initial outlay is $1,000 and the expected inflow is $1,200. The opportunity cost of capital is r = 0.20. The borrowing rate is rD = 0.10, and the tax shield per dollar of interest is Tc = 0.35.

a. What is the projects base-case NPV?

b.What is its APV if the firm borrows 30% of the projects required investment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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