# Adjusted Present Value (APV) of the Project Assignment

RINRUN Corporation, an all equity firm, is considering \$1 million investment. This investment will be fully depreciated according to the straight-line method over its four-year life. The project is expected to generate \$500,000 per year in earnings before taxes and depreciation for four years. The investment will not change the business risk level of the firm. The company can obtain a four-year, 5 % loan to finance the entire project from a national bank. All principal will be repaid in one balloon payment at the end of the fourth year. The bank will charge the firm \$10,000 in flotation fees, which will be amortized over the four year life of the loan. If the company financed the project entirely with equity, the firm’s cost of capital would be 10 %. The corporate tax rate is 30% a) What is the adjusted present value (APV) of the project? (No need to get the final value, just indicate the formula to get this value) Is this a financially acceptable project for E-Innova?

b) Would you recommend the company to change the residual value from its actual value of 0 to a value of 10 per cent of the investment? What would be the APV with a 10% investment residual value? (No need to get the final value, just indicate the formula to get this value)

c) Would you recommend the company to change the depreciation method from its actual straight-line method to the accelerated method? What would be the APV with the accelerated method? (No need to get the final value, just indicate the formula to get this value)

A Company issues a bond with a face value of \$100, 5 years to coupon rate of 5 percent paid annually maturity, 110% reimbursement, and a

a) At what price will this bond be issued if investors demand a yield of 5 percent on this kind of bonds? Write down the formula needed to calculate it (no calculus needeđ). Do you expect this price to be \$100, >S100, or 5%, or

Our Basic features
• Free title page and bibliography
• Plagiarism-free guarantee
• Unlimited revisions
• Money-back guarantee
Our Options
• Writer’s samples
• Overnight delivery
• Part-by-part delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our customer is the center of what we do and thus we offer 100% original essays..
By ordering our essays, you are guaranteed the best quality through our qualified experts.All your information and everything that you do on our website is kept completely confidential.

### Money-back guarantee

Academicwritingcompany.com always strives to give you the best of its services. As a custom essay writing service, we are 100% sure of our services. That is why we ensure that our guarantee of money-back stands, always

### Zero-plagiarism tolerance guarantee

The paper that you order at academicwritingcompany.com is 100% original. We ensure that regardless of the position you are, be it with urgent deadlines or hard essays, we give you a paper that is free of plagiarism. We even check our orders with the most advanced anti-plagiarism software in the industry.

### Free-revision guarantee

The Academicwritingcompany.com thrives on excellence and thus we help ensure the Customer’s total satisfaction with the completed Order.To do so, we provide a Free Revision policy as a courtesy service. To receive free revision the Academic writing Company requires that the you provide the request within Fifteen (14) days since the completion date and within a period of thirty (30) days for dissertations and research papers.

### Privacy and Security policy

With Academicwritingcompan.com, your privacy is the most important aspect. First, the academic writing company will never resell your personal information, which include credit cards, to any third party. Not even your lecturer on institution will know that you bought an essay from our academic writing company.