Digital Organics (DO) has the opportunity to invest $0.92 million now (t= 0) and expects after-tax returns of $520,000 int= 1 and $620,000 int= 2. The project will last for two years only. The appropriate cost of capital is 11% with all-equity financing, the borrowing rate is 7%, and DO will borrow $220,000 against the project. This debt must be repaid in two equal installments. Assume debt tax shields have a net value of $0.20 per dollar of interest paid. Calculate the project’s APV.(Do not round intermediate calculations. Rounddown your answer to the nearest whole dollar.)
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