Prime's current capital structure consists of 40% equity and 60% debt. Its equity consists of 200,000 common shares.The company is considering whether to increase its debt-to-equity ratio to 65% debt and 35% equity.

The company has 1.5 beta. Its 25 years bond is sold at $980 with 6% semi annual coupon rate.

Additional Information:

The corporate tax rate is 25%.

The market premium is 10%.

The risk-free return rate is 4%.

Investment Projects:

Project A:

This project involves finalizing R&D and expanding production capacity for new product line ,which is estimate to generate $2 million, $3 million, $5 million, $5 million and $5 million annual cash flows for the next five years.

The initial investment required for this project is $10 million.

Project B:

Project B requires diversifying into an energy drink. It is riskier as the company has expertise in the non-energy drin. However, it has the potential to generate higher returns. It is expected to cost $4 million and produce cash flows of $2 million per year for the next five years with no salvage value.

1. How much is theIRR for project A and project B?
2. How muchCash Payback and Discounted Cash Payback with new capital structure for both Project A and Project B?
3. provide investment recommendation?