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1. APV Shorebird, Inc., an all-equity firm, is considering an investment of $1.25m that will be depreciated according to the straight-line method over its 4-year life and does not change the risk level of the firm. The project is expected to generate earnings before depreciation and taxes of $436k per year for four years. The company has the option to obtain a 4-year, 9.5 percent loan to finance the project from the SBA. All principal will be paid in one balloon payment at the end of the fourth year. The SBA will charge the firm $49k in flotation fees, which are planned to be amortized over the life of the loan. If Shorebird decided to finance the company entirely with equity, the firm's cost of capital would be 13 percent. The corporate tax rate is 25 percent. Using the APV method, determine whether or not the company should consider the project