Question 1 (Leveraged Valuation Methods): (20 points) Suppose a company is evaluating a project that generates perpetual free cash flow (after taxes) equal to $ 50,000. The shareholder cost in the absence of leverage is 16% .In case the company wishes to finance part of the project with debt, the latter will have a cost of 6% before taxes. The tax rate is 25%. The initial investment of the project is $ 250,000 and the company has decided to take a level of perpetual debt such that the ratio invested to equity (at market value) is equal to 14. 1. Calculate the NPV of the project without leveraging and discuss whether or not to accept the project 2. Calculate the cost of leveraged equity (using Modigliani-Miller proposition 2) and the WACC 3. What is the level of perpetual debtB generated by the same WACC as 2)? 4. The VPA, WACC and FTE method and verify that all three methods generate the same leveraged VPN. Indicate what is your final decision on the project