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Problem

Swamp & Sand Industries has the following data. At a discount rate of 12%, calculate its Adjusted Present Value (APV) for 20X1 through 20X3. Interest expense is $5 million per year. The interest rate on debt is 6%. The corporate tax rate is 40%.


20X1

20X2

20X3

FCF

177 177 177

Depreciation

6

6

6

All numbers are in millions.

Financial Management, Finance

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