Assume that several days ago, DLTR (the company you analyzed below) issued $75M worth of equity. At the same time, neither the company, nor the analysts expect DLTR to change its target D/V ratio. In addition, assume that right now, DLTR considers a new project (which will utilize primarily the core assets of DLTR). The projected project cash flows for DLTR:

Cost: $75 mil to be paid at T=0.

Project benefits: $6 mil/year for years 1,...,20

Should the company adopt or reject this project?

Hint: Your answer must be number-driven (i.e. not based on guesses, feelings). If you feel you need to know some required rate of return, then remember that DLTR is a company you analyzed below.

DLTR - Dollar Tree

Equity (E) = $23,262,265,000.00

Debt (D) = $3,229,500,000

Value of Dollar Tree (V) = $26,491,765,000.00

Shareholders Own (E/V) = 87.81%

Debt-Holders Own (D/V) = 12.19%

Tax Rate = 21%

WACC = 5.06%

Risk-Free Rate (Rf) = 1.61%

Cost of Equity (Re) = 5.61%

Cost of Debt (Rd) = 1.40%

Market Risk Premium (MRP) = 5%

Beta = 0.8