Problem:
Consider a project lasting one year only. The initial outlay is $2,200 and the expected inflow is $2,400. The opportunity cost of capital is r = 0.22. The borrowing rate is rD = 0.12, and the tax shield per dollar of interest is Tc = 0.35.
Required:
Question 1: What is the project's base-case NPV?
Question 2: What is its APV if the firm borrows 28% of the project's required investment?
Note: Please provide through step by step calculations.