Question 7 (14 points) A company is considering an investment in a new project. The required investment in the project is $9,200, and the project is expected to produce a perpetual EBIT (that is, pre-tax operating profit) of $1,429 at the end of each year. The risk free rate () is 3%, the expected return of the market portfolio (()) is 10%, and the corporate tax rate is 30%. Assume no bankruptcy costs. The unlevered beta of the project () is 1.4, and the beta of the companys assets is 0.8. a. Assume the company plans to finance the project entirely by equity. Should the company invest in this project? Explain b. Assume the company can finance this investment with a $4,000 perpetual debt (and the rest with equity). The company approached the bank, and the bank said that the company can borrow this amount at 6% interest rate. Should the company take the loan and invest in the project? c. Following section (b), assume now that the bank reassessed the companys debt risk. Following this reassessment, the bank is willing to lend the company this amount at an interest rate of 4% (cost of debt is 4%). Assuming that the cost of debt is reduced to 4%, should the company invest in the project?