This is a bonus question worth $10$ points. Your instructor will add on the bonus points manually based upon your response.

Calculate the NPV of a project given the following $-$ and should the company accept or reject the project:

It is estimated that the project will deliver $$25,000$ operating profit each year for $12$ years.

The$-$firm can borrow as much as they like from their bank $($which is being bailed out by the Federal Government $-$ bless $\text{'}$em$)$ at $10\%.$

They have no retained earnings available $-$ they are paying all their net profit out in dividends at $$2\mathrm{.}00$ per share $($I never said this was a well run company$)$

They can sell stock at $$20\mathrm{.}00$ with a flotation cost of $$4\mathrm{.}00$ per share. The stock's earnings$/$dividends are growing at $6\%$ They are in a $40\%$ marginal tax bracket.

The Board of Directors has determined a target capital structure of $60\%$ debt and $40\%$ common equity. $-$ they have no preferred stock.

The machine they are considering costs $$160,000.$

And for the last time, be sure to show all work and formulas! You've been warned!