Question: Pacific Ltd is evaluating a new project. The initial investment of the project is $10 million and it will generate perpetual after-tax operating cash flow

Pacific Ltd is evaluating a new project. The initial investment of

Pacific Ltd is evaluating a new project. The initial investment of the project is $10 million and it will generate perpetual after-tax operating cash flow of 2 million per year. The firm is subject to the corporate tax rate of 21%. RO = 10%, where RO is the cost of capital for a project of an all-equity firm. Pacific Ltd borrows $8 million to support the project with interest rate 3%. Required Please use APV. FTE and WACC to estimate the net present value of the project

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