XYZ Corp. has 10 million shares of common stock outstanding. The common stock currently sells for $50 per share and has a beta of 1.50 XYZ Corp. has 300,000 bonds outstanding and sell for 105% of par value. The ytm (yield to maturity) of the bond is 5% p.a. The market risk premium is 6%, T-bills are yielding 3% p.a and corporate tax rate is 30%. All p.a. rates are EAR. What is the firm's market value capital structure (i.e. Market value of debt/Market value of equity)? What is the firm's cost of capital? If XYZ Corp. is evaluating a new investment project that has an investment of $10 million at year 0 and is expected to have a cash flow of $3 million from Year 1 onwards growing at the rate of 6%p.a. forever, what is the NPV of the project? [10]