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2. A corporation has $500,000 in bonds outstanding with a 5% annual coupon rate, 15 years to maturity, a $1,000 face value, and a $890

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2. A corporation has $500,000 in bonds outstanding with a 5% annual coupon rate, 15 years to maturity, a $1,000 face value, and a $890 market price. The company's 5,000 shares of common stock sell for $20 per share and have a beta of 2.5 . The risk-free rate is 4%, and the market return is 12%. The company has a 35% tax rate. They are considering a project which will provide annual cash flows of $2,500 per year for 10 years, costs $20,000 and requires working capital of $3,000. a. What is the NPV and IRR for this project? Based on your analysis, should the company accept the project

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