Suppose you have just become the president of J&J and the first decision you face is whether to go ahead with a plan to renovate the company's AI systems.

The plan will cost the company $$60$ million, and it is expected to save $$15$ million per year after taxes over the next five years.

The firm sources of funds and corresponding required rates of return are as follow:

$$5$ million common stock at $16\%,$

$$800,000$ preferred stock at $12\%,$

$$6$ million debt at $7\%.$

All amounts are listed at market values and the firm's tax rate is $30\%.$

You are the financial manager and supposed to calculate the NPV$.$ What's the NPV$?$ Do you recommend taking the project?

Group of answer choices

NPV $=-$$$8\mathrm{.}098$ Millions; I'll tell the owners not to take the project.

NPV $=-$$$1\mathrm{.}720$ Millions; I'll tell the owners not to take the project.

NPV $=-$$$3\mathrm{.}261$ Millions; I'll tell the owners not to take the project.

NPV $=$ $$5\mathrm{.}167$ Millions; I'll recommend the owners to take the project.