Problem $18-12$ APV

Longhorn, Incorporated, has produced rodeo supplies for over $20$ years. The company currently has a debt$-$equity ratio of $60$ percent and the tax rate is $25$ percent. The required return on the firm's levered equity is $13$ percent. The company is planning to expand its production capacity. The equipment to be purchased is expected to generate the following unlevered cash flows:

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