You have been asked to assess whether it makes sense for KLA INC. to invest in a new telecom investment. The initial investment is expected to be $40 million and the project is expected to generate income for the next 8 years, with the income statement below providing a measure of revenues and expenses for the project. The project is expected to increase working capital investment by an amount equal to 7% of annual revenues. The working capital investment is expected to be recovered at the end of the project.

Revenues	$28,000,000
Cost of Goods Sold	$12,000,000
Operating Expenses	$6,000,000
Depreciation	$4,000,000
EBIT	$6,000,000
-Interest Expenses	$2,000,000
EBT	$4,000,000
Taxes @ 25%	$ 1,000,000
Net Income	$3,000,000

If the cost of capital for KLA INC. is 8% should the company invest in this project?