Caspers Inc. currently has the cost of capital at 8%. This firm is analyzing a proposed expansion project that is much riskier than the firm's current operations. Thus, the project will be assigned a discount rate equal to the firm's cost of capital plus 3 percent. The proposed project needs to buy a new facility that requires an initial cost of $17.2 million with annual depreciation of $795,000. The project also needs to build up additional inventory of $687,000 now and will be distributed by the end of the project. Management estimates the facility will generate after-tax operating cash flows of $1.985 million a year over its 20-year life. After 20 years, the company plans to sell the facility for an estimated $1.3 million. The company tax rate is 33%. 1) What should be the discount rate assigned to the project? 2) What should be the projects cash flows at time 0? What will be its annual cash flows during year 1 and year 19? What will be its annual cash flows in year 20? 3) Please calculate the projects net present value, profitability index, internal rate of return, and payback period. 4) Should the firm undertake this project? Why or why not?