Christopher Industries is deciding whether, or not, to upgrade equlpment for $$1\mathrm{.}37M.$ It plans to use $100\%$ debt to finance the equipment.

The Cost of debt is $9\mathrm{.}5\%.($Remember$,$ there is a tax shield associated with cost of debt$).$

The investment will generate $267$ K for years $1-3,312K$ in year $4,325K$ in year $5$ and $328$ K in year $6.$ There is no residual value.

Should Christopher Industries proceed with the investment if there is a residual value of $$10,000$ at the end of the useful life?

$($show work similar to the example above$).$

Can you please find the cost of equity.