(17) A projec is $48 million. The tax rate is 4. t generates net (after-tax) cash flows of $20 million every year for 4 years. The investment debt/value) of 45%. 25%. The firm has a target debt ratio (debt ratio For the equity, they will isue $3,600,000 in preferred stock and the rest of the total funding will be from retained earnings. They intend to raise the funds to keep this target ratio. The firm's current bonds have 5 years left to maturity, a coupon rate of 7% with annual coupons, a face value of $1000 and currently trade for $980. The (before-tax) cost on any new debt will be the same as the yield to maturity on the current bonds. . The preferred stock has a dividend of $5 with a price of $42. Issue costs on preferred stock are $2. To estimate the cost of retained earnings, the firm has an equity beta of 1.2. The risk-free return is 4% and the market risk premium is 10%. Use the weighted average cost of capital(WACC) to find the net present value (NPV) of the project. Will they take the project? Explain