A Project Has an Unlevered NPV of $1

Multiple Choice

A project has an unlevered NPV of $1.5 million.To finance the project,debt is being issued with associated flotation costs of $60,000.The flotation costs can be amortized over the project's 5-year life.The debt of $10 million is being issued at the market interest rate of 10 percent paid annually,with principal repaid in a lump sum at the end of the fifth year.If the firm's tax rate is 21 percent,calculate the project's APV.

A) $2,441,107
B) $1,494,028
C) $2,384,312
D) $2,245,618
E) $1,909,417