You are given the following information on a project with a 5-year life that requires an initial investment of $500,000. If things go well (with probability 0.60) the project will generate $220,000 for each of the years 1-5. If not, (with probability 0.40) the cash flows will be -$20,000 per year for each of the years 1-5.

Assume that the projects beta is 0.75, the expected Market return is 12.0%, and the risk-free rate is 4.0%. Further, the firm plans to finance the project with $300,000 of equity and $200,000 in debt. The YTM on the companys bonds is 6.0% and its marginal tax rate is 25%. [Use Discrete compounding throughout].