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(Solved): Abacus Industries is considering a 3-year project that will cost $200 today followed by free cash fl ...



Abacus Industries is considering a 3-year project that will cost $200 today followed by free cash flows to the firm of $100 in year 1, $80 in year 2, and $160 in year 3. The tax rate is 35%. Assuming instead of 100% equity, Abacus funds the project with $70 of debt at an interest rate of 7%. For the three years of the project ABC will pay only interest. The loan of $70 will be repaid at the end of year 3. The balance of the cost of the project will be financed with equity. What is the levered NPV of this project using the APV method:



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