Caspers is analyring a proposed espansion project that is much riskier than the firmis current operations. Thus, the project will be assigned a discount rate equal to the firmis cost of capital plus 2.5 percent. The proposed project has an initial cost of 518.1 million that will be depreciated on a straight fine basis to a rero book value over 20 years. The project also fequles add tonal invertory of $428,000 over the project's lifo. Management estimates the facility wis generate cash infiows of $2.46 milion a year over its 20 year life. After 20 years, the company plans to seil the facilf for an aftertax amount of 514 million. The company has 58.000 shares of common stock outstanding at a market price of 552 a share. This atock just paid an annual dividend of 52.84 a share. The dividend is expected to incrense by 3.6 percent annually. The firm also has 15,000 shares of 9 percent preferred stock with a market value of $57 a share. The preferred stock has a par value of $100. The company has 51.2 million of face value bohds with semiannual payments and a coupon rate of 9 percent. The bonds are currenty priced at 102 percent of face value and mature in 13 years. The tax rate is 21 percent. Should the firm. pursue the expansion project at this point in time? Why of why not? Multiple Choice. Reject; the NPV is $.7 million. Accept; The NPV is $1.4 million. Accept: The NPV is $.7 million. Reject; the NPV is $1.2 million. Reject; the NPV is $3.0 million