Capital Budgeting! a$)$ Calculate the NPV of the following investment opportunity based on the information below

$($all numbers in EUR$)$ and decide on whether it is a good idea to execute the project. Also

include a short explanation on why $/$ why not to accept the project based on your result.

Information on capital costs:

Market value of equity $1,800,000$

Book value of equity $500,000$

Total debt $4,500,000$

Total financing costs p$.$ a$.$ for debt $157,500$

Corporate tax rate $25\%$

Cost of equity $13\%$

The predicted cash flows of the investment opportunity are as follows:

Initial investment $250,000$

Year$150,000$

Year$2185,000$

Year$360,000$