Problem $8-8$

You have the following information about Burgundy Basins, a sink manufacturer.

Equity shares outstanding

Stock price per share

Yield to maturity on debt

Book value of interest$-$bearing debt

Coupon interest rate on debt

$$40\mathrm{.}0{}^2$ million

Market value of debt

Book value of equity

cost of equity capital

Tax rate

$7\mathrm{.}5\%$

$$320$ million

$4\mathrm{.}8\%$

$$290$ million

$$500$ million

$14\%$

$35\%$

Burgundy is contemplating what for the company is an average$-$risk investment costing $$40$ million and promising an annual ATCF of $$6\mathrm{.}4$ million in perpetuity.

a$.$ What is the internal rate of return on the investment?

Internal rate of return

$\%$