A project to produce rocker seats requires a $10 million investment. If the project is financed on an all equity basis, the after tax cash flows are $1.8 million for 10 years. The cost of unlevered equity for such a solar heater project is 12%.

The firm intends to raise $5 million in debt financing that will be repaid in equal installments in 10 years. The interest rate on the debt is 8%. Is the project worthwhile? Use APV method.