Ferrari Corp., an automotive producer with a current debt-to-equity ratio of 3, is considering expanding its operations to produce bicycles. Unsurprisingly, the bicycle industry faces a different set of risks than the automotive industry. However, the executives at Ferrari Corp. observe that Bikes Inc., a bicycle company has a cost of equity of 16%, a cost of debt of 6%, and a debt-to-value ratio of 40%. Ferrari plans to finance its expansion into bicycle production with 60% debt and 40% equity. The cost of debt for Ferrari is 8%, and the corporate tax rate is 25%. Ferrari expects the expansion to require a $10 million up front investment, and that it will generate $2 million in free cash flows at the end of the first year, and every year after that forever... what is the NPV of the expansion? $24,340,254 $5,600,000 $8.518,519 $15,000,000 $11,276,596