To finance this acquisition, Big Spenders Inc needs to issue bonds and common shares. Currently, it can issue its 10 years semiannual bonds with 6% coupon rate at $990 per bond. Big Spenders is a public company and its share is traded at Toronto Stock Exchange market. The treasure bill earns 3% annually (Rf) and the market premium is 10%. Big Spenderss beta is 1.2 last year. The investment will be financed with 40% debt and 60% equity, both based on market values. Assume the firm's tax rate is 15%.

Looking into further the investment opportunities, the accountant has forecasted the operating cash flows of both companies

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Operating Cash Flows	Year 1	Year 2	Year 3	Year 4	Year 5
Auto Wash Bot Ltd	55,000	45,000	56,000	200,000	150,000
Popeyes Muscle Wash Ltd	75,000	75,000	75,000	120,000	120,000

Explaining to your client which investment criteria the company can use to make its investment decision and what are the pros and cons? Provide the calculation of the investment criteria you select and give recommendation to your client which company they should acquire