# Digital Organics (DO) has the opportunity to invest \$1.06 million now (t = 0) and expects after-tax returns of \$660,000 in t = 1 and\$760,000 in t= 2. The project will last for two years only. The appropriate cost of capital is 13% with all-equity financing, the borrowingrate is 9%, and DO will borrow \$360,000 against the project. This debt must be repaid in two equal installments of \$180,000 each.Assume debt tax shields have a net value of \$0.40 per dollar of interest paid.Calculate the project's APV. (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations. Roundyour answer to the nearest whole number.)Adjusted present value

Question
Step 1

Calculation of Total PV of Interest Tax Shield:

Step 2

Excel Workings:

Step 3

Calculation of NPV:

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