1. Taco Bell is evaluating a project that costs $10,000,000 in a project. The project is to be financed by drawing down 6 million of the firm's cash reserves, which is earning a risk-free return of 4%, and remaining 4 million will be raised by issuing new debt, requiring 5%. The firm's current income statement is the following: EBIT 6,500,000 Interest Expense (minus) 400,000 Interest Income (add) 240,000 EBT 6,340,000 Taxes (21%) 1,331,400 Net Income 5,008,600 The firm has 2 million shares outstanding. The firm has a cost of equity of 10%, and a WACC of 8%. The project is expected to generate 650,000 in EBIT forever, and does not have any associated depreciation expenses, or NWC needs. E. Using the same information in question 1, lets assume that Taco Bell funds the full 10,000,000 by issuing equity. If Taco Bell's current stock price is $18.00 a share, what impact will it have on the EPS of the firm? What is the new EPS under this scenario? Is the project accretive or dilutive? 1. Taco Bell is evaluating a project that costs $10,000,000 in a project. The project is to be financed by drawing down 6 million of the firm's cash reserves, which is earning a risk-free return of 4%, and remaining 4 million will be raised by issuing new debt, requiring 5%. The firm's current income statement is the following: EBIT 6,500,000 Interest Expense (minus) 400,000 Interest Income (add) 240,000 EBT 6,340,000 Taxes (21%) 1,331,400 Net Income 5,008,600 The firm has 2 million shares outstanding. The firm has a cost of equity of 10%, and a WACC of 8%. The project is expected to generate 650,000 in EBIT forever, and does not have any associated depreciation expenses, or NWC needs. E. Using the same information in question 1, lets assume that Taco Bell funds the full 10,000,000 by issuing equity. If Taco Bell's current stock price is $18.00 a share, what impact will it have on the EPS of the firm? What is the new EPS under this scenario? Is the project accretive or dilutive