Period Cash Flows

0 ($100.00) Cost of debt = 5%

1 $50.00 Tax = 30% 2 $40.00 Debt ratio = 40%

3 $30.00 Equity = 20,000

4 $40.00 10-year Treasury bond yield = 4%

5 $20.00 Beta = 0.8; Market risk premium = 5%

What is the IRR of these cash flows? Accept or reject?