What is the apv of the project

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Reference no: EM133379570

Question: You are valuing a project for Gila Corporation using the APV method. You already found the net present value of free cash flows from the project (discounted at the appropriate cost of equity) to be $530,000. The only Important side effect of financing is the present value of Interest tax shields. The project will be partially financed by a constant $1 million In debt over the life of the project, which Is three years. Gila's tax rate is 35 percent, and the current interest rate applicable for the project's debt is 6 percent (assume this rate Is also appropriate for discounting the interest tax shields). Assuming tax shields are realized at the end of each year, what is the APV of the project? Note: Do not round Intermediate calculations.

Reference no: EM133379570

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