Levered Incs market value of equity is $60 million and market value of its debt is $50 million. Levereds pretax cost of debt is 9.0%, while corporate tax rate is 34%. The risk free rate is 4%, while the expected market return is 12%. Levereds firm level beta is 0.70.

In part (e) suppose that this company considers a project that will bring $150,000 at the end of year 1 and $100,000 at the end of year 2. The initial investment is $250,000. The project will be financed by the same combination of debt and equity.

E)Should company go ahead with the project? Explain your answer.