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. The opportunity cost of capital is r =0.20. The borrowing rate is rD=0.11 and the tax shield per dollar of interest is Tc=0.21
What is the projects base-case NPV?
What is its APV if the firm borrows 29% of the projects required investment?

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