The Ronald Co Ltd (RCL) is contemplating a $40 million national duplication of its replica division. It has forecasted after-tax cash flows for the project of $10 million per year in perpetuity. RCLs average yield to maturity is 8 per cent and its cost of equity capital is 15 per cent. The tax rate is 30 per cent. Harry Lehman, the companys chief financial officer, has come up with two financial options: 1) A $20 million issue of 10-year debt at 8 per cent interest. The issue cost would be 1 per cent of the amount raised. 2) A $20 million issue of ordinary shares. The issue cost would be 12 per cent of the amount raised. The target debt/equity ratio of RCL is 1. The expansion project will have the same risk as to the existing business. (a) What is the NPV of the new project at the target debt/equity ratio?