Queen limited has an investment proposal which is expected to yield a return of 12%. The CEO is contemplating whether to go ahead with the proposal or not. Following is the capital structure of the firm as per book value weights. Equity capital - 1.5 crore shares of Rs. 10 each 12% preference capital, 1 lakh shares of Rs. 100 each, 11% term loan of Rs. 12.5 crore, 11.5% debentures - 10 lakh debentures of Rs. 100 each and retained earnings of Rs. 20 crore. The company is expected to declare equity dividend at the rate of 36% next year. The company is growing at the rate of 7% pa and is currently quoted at Rs. 40 per share. Debentures were issued 4 years ago for a tenure of 10 years and are currently trading at a rate of Rs. 80. Preference shares redeemable in next 10 years are trading at Rs. 75 per share. The income tax rate is 30%.

Advise the CEO if the investment proposal should be undertaken.