Summer of Hope (SH) Inc. is considering a $10 million project that will last for five years. The

tax rate is 40%. Risk-free rate is 5% and the cost of unlevered equity is 10%. SH Inc. can

obtain a five year, balloon payment loan for $7.5 million after flotation costs. The interest rate is

risk free cost of debt. The flotation costs are 1% of the amount raised. What is the NPV of the

foliation costs?

A) -55,438.93

B) -49,518.32

C) -52,783.11

D) -75,757.58

E) None of the options