Bob's Taco Shop is considering a project that will generate a cash inflow of $$8$ million in year one. The project's cash flow will then grow at $3$ percent per year in perpetuity.

The firm finances $25$ percent of all assets with debt, and the after$-$tax cost of debt is $4$ percent. The firm estimates the cost of equity is $10$ percent.

Calculate the firm's WACC and then use the WACC to determine the maximum amount the firm should spend to undertake this project.

Multiple Choice

$$ $$320$ million

$$ $$145$ million

$$94$ million

$$ $$145$ million

$$ $$5$ million