You have the following information about Burgundy Basins, a sink manufacturer.

Equity shares outstanding 20 million

Stock price per share $40.00

Yield to maturity on debt 7.5%

Book value of interest-bearing debt $320 million

Coupon interest rate on debt 4.8%

Market value of debt $290 million

Book value of equity $500 million

Cost of equity capital 14%

Tax rate 35%

Burgundy is contemplating what for the company is an average-risk

investment costing $40 million and promising an annual after-tax cash

flow of $6.4 million in perpetuity.

c. if undertaken, would you expect this investment to benefit shareholders? why or why not?