A project has a NPV, assuming all equity ﬁnancing, of €1.5 million.To ﬁnance the project, debt is
issued with associated ﬂotation costs of €60,000.The ﬂotation costs can be amortized over the
project's 5 year life.The debt of €10 million is issued at 10% interest, with principal repaid in a lump
sum at the end of the ﬁfth year.If the ﬁrm's tax rate is 34%, calculate the project's APV.

Question

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The Answer of A project has a NPV, assuming all equity ﬁnancing, of €1.5 million.To ﬁnance the project, debt is
issued with associated ﬂotation costs of €60,000.The ﬂotation costs can be amortized over the
project's 5 year life.The debt of €10 million is issued at 10% interest, with principal repaid in a lump
sum at the end of the ﬁfth year.If the ﬁrm's tax rate is 34%, calculate the project's APV.

A Project Has a NPV, Assuming All Equity ﬁNancing, of €1.5