A company is considering an expansion of its plant which will increase profits (revenues- costs) by $1400 a year for 10 years. The cost of the expansion is $10000 and straight-line depreciation is allowed. The tax rate is 20%. The firm debt/equity ratio is 1 (50% debt and 50% equity). Its beta is 1.2 , the risk free rate is 3% and the market expected return is 9%. Since the company is highly rated, it can raise debt at close to the risk-free rate, i.e. at 4%. Should the project be taken? b) The CFO argues vehemently that the firm should always use debt because 4% is much less than the cost of equity. What is your advice?