Question: Consider a project lasting one year only. The initial outlay is $ 1 , 0 0 0 and the expected inflow is $ 1 ,

Consider a project lasting one year only. The initial outlay is $1,000 and the expected inflow is $1,200 post-tax. The opportunity cost of capital r =0:20. The borrowing rate is rD =0:10, and the net tax shield perdollar of interest is t = tc =0:35. Suppose the frm
borrows 30% of the projects value(including tax shields). What is the project's APV?

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