Assignment ; As the director of a firm's capital budgeting department, you have been asked to evaluate a project. After collecting information from various sources, you have determined the following. The firm's preferred stock pays a constant annual dividend of Rs. 2.25 and is currently selling for Rs.20. The firm is expected to pay a common stock dividend of Rs.3 in one year, with anticipated growth of 2% each year thereafter. Currently, the common stock is selling at a price of Rs.23.75. The firm has 8 year bonds outstanding with a coupon rate of 8.75%, paid annually. The bonds are currently selling at par. The firm is currently being financed with Rs.10,000,000 of debt, Rs.20,000,000 of common equity, and Rs.5,000,000 of preferred stock. The project requires the use of equipment valued at Rs.6,200,000. The equipment currently has a book value of Rs.3,000,000 with two years of straight-line depreciation (to zero) remaining (Rs.1,500,000 each year). You anticipate that the equipment can be sold in three years for Rs.2,100,000. Anticipated sales are 1,000,000 units per year based on a sale price of Rs.11 per unit. The cost of producing each unit is Rs.8.50. If the project is accepted, the firm will need to hire an additional manager with an annual salary of Rs.80,000. The product complements another of the firm's products. As a result, you anticipate increased sales of Rs.700,000 per year for that product. Total research (information gathering for project analysis) expenses to date are Rs.26,000. If the project is accepted, the firm will have to forego another project that has a NPV of Rs.584,000. The firm's marginal tax rate is 40%. Should the project be accepted?

My question is should we take interest on loan in cash ??