An all-equity firm has 20 million shares currently selling for $32.50 each. The firm plans to invest $100 million immediately in a project with the same business risk as the existing assets of the firm. The project is expected to generate $25 million of pre-tax earnings (also equal to cash flows) in perpetuity. The firm's current cost of capital is 12.5%, and it pays a 40% tax rate. The firm plans to borrow the amount needed to start the project, $100 million, by issuing bonds. The interest rate on those bonds or the firm's debt will be 8% yearly. If the cost of equity remains unchanged after borrowing, what will be the NPV of the project? $41.91 million None of the above $37.26 million $33.62 million $30.73 million