Youhave come across a project which has an initial investment ofINR5 crores. TheEBIT expected from this project is INR 1 crore in perpetuity, a more stable project with more predictabilityin the cash flows. Projectrisk issimilarto the businessriskofthe firm's core operations.Theopportunitycostofcapitaltothe firmifit was an all equityfinanced firmis 14.5%. The tax rate is 30%. Would you choose this project ? 3 Now you have been told that the initial investment can be financed for a period of 4 years with a INR 5 crores debt (principal amount) at a rate of 9%. The prin- cipal amount of the debt will be paid back in 5 equal installments at the end of each year for the next 5 years. Will youchange your decision aboutthe project now ?