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53. Project Evaluation 2. Evaluate the following project (FIND NPV and IRR): A. The investment - Project cost: $60 million: This can be depreciated to ZERO using straight line for 2 years (project's life is 2 years). - Tax Rate =25% - Revenue is expected at 45 million the first year and expected to grow 5% in year 2 . - Costs of goods sold are estimated to be 15% of revenues. - Fixed costs are 6 million in year one and are expected to grow at 10% in year 2 . - This project will have a value of $15 million at the end of the second year. B. The Firm - Long-term debt outstanding $35 million - The firm's bonds carry a face value of $1000 and a coupon rate of 5%, interest is paid semi-annually. Currently 20 year maturity bonds are selling for $998. - Number of shares of common stock outstanding is 700,000 - Price per share $50 - Beta 1.50 - Risk Free rate is 4% - Expected return on the S+P500 (the market) is 15%