Seeing the success of Verizon's high speed internet service through Fiber Optic cable (FiOS), AT&T is investing in a similar service called U-verse. To expend and to improve the quality of service, AT&T needs to invest $230 million to upgrade its equipment, which can be depreciated over a four year period using straight-line depreciation with a salvage value of $30 million (which can be sold at the end of the fifth year). To fund the project, AT&T will issue a five year bond that carries 5% interest (APR on semi-annual base). For the next four years, AT&T plan to charge $499 each year for each of its subscriber. In order to promote its new service, AT&T will offer $100 discount to its new customers in their first year service. The projected total number of subscribers and annual costs for the next four years are as follows (in million), Year Total Number Total Costs 160 200 300 350 Of Subscriber 0.5 0.8 2 4 Suppose the marginal tax rate for AT&T is 30%, what is the average accounting return over the next four years? What is the project's NPV at a discount rate of 12%