You are evaluating a project that requires an investment of ​$95 today and guarantees a single cash flow of ​$116 one ye

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You are evaluating a project that requires an investment of ​$95today and guarantees a single cash flow of ​$116 one year from now.You decide to use
100% debt​ financing, that​ is, you will borrow ​$95.The​ risk-free rate is 5% and the tax rate is 38%. Assume thatthe investment is fully depreciated at the end of the​ year,so without leverage, you would owe taxes on the difference betweenthe project cash flow and the​ investment, that​ is,​$21.
a. Calculate the NPV of this investment opportunity using theAPV method.
b. Using your answer to part ​(a​), calculate the WACC of theproject.
c. Verify that you get the same answer using the WACC method tocalculate NPV.
d. ​Finally, show that​ flow-to-equity method alsocorrectly gives the NPV of this investment opportunity.