5. A publiclyheld corporation has a total debt of 12 million with an average interest cost of 15%. The company has outstanding 1 million shares of common stock, currently traded at a price of 10/share in Borsa stanbul. The company is subject to a 20% corporate tax rate.The firm is considering a new project, which requires an initial investment in equipment of 90,000 and also an initial investment in working capital of 10,000 (at t = 0). You expect the project to produce salesrevenue of 120,000 per year for three years. You estimate manufacturing costs at 60% of revenues. (Assume all revenues and costs occur at yearend) The equipment fully depreciates using straightline depreciation over three years. At the end of the project, the firm can sell the equipment for 10,000 and also recover the investment in net working capital. (Corporate tax rate = 20%)

a. Find the project's payback period, IRR, NPV and profitability index.

b. Should the company invest in the project? Explain.

c. Does your decision in (b) depend on the way the project is financed? If so, how?