You are given that the capital asset pricing model holds for all investments. The risk-free rate is
zero and the corporate tax rate is 30%. A firm with a D/E ratio of 2 has a cost of debt of 10%
and a weighted average cost of capital of 11%.
The firm has the opportunity to invest $1 million in a project with a positive net present value.
What is the minimum net present value for which debt overhang would not prevent the equity
holders from approving the project?