The firm wants to diversify with a new product line. The project requires an initial investment of $22,000,000 and will provide $2,580,000 in after-tax unlevered cash flows every year forever. The unlevered cost of capital is 12%. Perpetual debt (bonds) of $6,000,000 will be issued with a yield and coupon rate of 5%. The tax rate is 25%.

a. Find the value of the project using APV (adjusted present value).

b. What is your recommendation for this project? Explain.