4. You have the following information about Burgundy Basins, a sink manufacturer.4. You have the following information about Burgundy Basins, a sink manufacturer.

Burgundy is contemplating what for the company is an average-risk investment costing $25 million and promising an annual after-tax cash flow of $3.5 million in perpetuity.

a. What is the internal rate of return on the investment?

b. What is Burgundy's weighted-average cost of capital?

c. If undertaken, would you expect this investment to benefit share- holders? Why or why not?

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Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt Market value of debt Book value of equity Cost of equity capital Tax rate 15 million $25.00 7% $255 million 5% $250 million $200 million 12% 35%