Lemon Tree Inc. has a target capital structure which is based on 40% debt and 60% equity. The before-tax cost of debt and cost of equity are 5% and 12%, respectively. The market risk premium is 5% and the risk-free rate is 3%. The tax rate is 30%. (a) Lemon Tree is evThe project has an is the project NP Lemon Tree is evaluating an investment project that is as risky as the overall company's risk. The project has an initial cost of $250,000, and cash flows of $100,000 for the next four years. What is the project NPV? (8 marks) (b) What would be the Lemon Tree new WACC if it changes its capital structure to 50% debt and 50% equity? Assume the cost of debt increases to 6%