6) HGF ltd. is considering a project costing 1 crore lasting 10 years. This cost...
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6) HGF ltd. is considering a project costing 1 crore lasting 10 years. This cost can be 30% financed by 10% debentures repayable at par after 10 years. The estimated annual cash profit before interest, tax and depreciation is * 35 lakhs. The company is subject to 25% tax rate. The cost of unlevered equity is 18% and follows MM theory with corporate taxation for leveraged cost. Compute Arditti - Levy NPV, Equity NPV and Adjusted Present Value? How do they differ from standard NPV of the project? 14 Extracts of Present Value Factor Table N 5% 8% 10% 13% 14.29% 15% 1 0.9524 0.9259 0.9091 0.8850 0.8750 0.8696 2 0.9070 0.8573 0.8264 0.7831 0.7656 0.7561 3 3 0.8638 0.7938 0.7513 0.6931 0.6698 0.6575 4 0.8227 0.7350 0.6830 0.6133 0.5861 0.5718 5 0.7835 0.6806 0.6209 0.5428 0.5128 0.4972
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