Caterpillar $($CAT$)$ has debt valued at $$40$ billion on its balance sheet, while the market value of its common stock is roughly $$20$ billion. The yield to maturity on the debt is $5\mathrm{.}50\%,$ the cost of equity for the firm is $9\%,$ and the tax rate for the firm is $35\%.$

Caterpillar $($CAT$)$ has a project with the following cash flows $($in millions$)$:

$\backslash$table$[[$YEAR$,0,1,2,3,4],[$Cash flow,$-$$$40,$$$12,$$$12,$$$12,$$$12$