QUESTION 27 A firm is considering undertaking a new project. The firm's initial investment in equipment is $500,000. The project has an estimated life of four years. The revenue per year is estimated to be 5420,000 and operating costs per year are estimated to be 5240,000 The additional investment in net working capital will be $50.000 at the berunning of the project. The investment in net working capital will be recovered at the end of the project(years). The tax rate is 35% and the CCA rate for the Class 9 equipment is 30% The equipment can be sold at the end of the project for 550,000 The company feels that the risk of the project is higher than its existing operations. Therefore, it has decided to use a required rate of return (discount rate) for the project that is 296 higher than the firm's cost of capital Currently, the before tax cost of debt of the firm is 6% and cost of common equity is 10%. The capital structure of the firm based on market values indicate that assets are financed by 10% of common equity and 60% of debt Calculate the NIV of the project I Should the firm undertake this project? TTT