Two ambitious business graduates, Boris and Isabelle, are considering purchasing Premier Pizza, a frozen pizza manufacturer. Forecasted annual sales for the coming year are $10.8 million, with operating costs equal to 80% of sales, depreciation is 3% of sales, and required annual investment in equipment is 3% of sales. Sales, costs, and investments are expected to grow 4% in perpetuity. On the basis of their analysis of the industry, Boris and Isabelle anticipate financing their company with 24% debt. The required rate of return on the debt will be 5% and the required rate of return on the equity will be 16%. Premier Pizzas corporate tax rate is 35%. The risk-free interest rate is 3% and the market risk premium is 6%.