Should we proceed with this project?

Initial investment $=$ $$5,000,000$ taxes $=35\%$ Beta $=1\mathrm{.}27$ T$-$note $=2\mathrm{.}4\%$

Dividends paid $=$ $$1,000,000$ with a payout rate of $33\%$

Estimated sales are: $$2,500,000$ for year $1,$ $$4,000,000$ for year $2,$ $$7,500,000$ for year $3,$ $$6,000,000$ for years $4$ & $5,$ $$4,500,000$ for year $6$; $$1,500,000$ in year $7$ with a sale of asset in year $7$ for $$250,000$

VC $=52\%,$ FC $=$ $$400,000$ per year

company's benchmark is the Wilshire $5000$ which is expected to return $11\%$ this year

$250,000$ shares of common stock quoted today at $$25$ paying a dividend of $$1\mathrm{.}20$ per share

$100,000$ shares of preferred stock quoted today at $$45$ paying a dividend of $$2\mathrm{.}50$ per share

Company is paying on a $20$ year, $4\mathrm{.}75\%$ loan issued $5$ years ago with today's principal $=$ $$2,750,000$

There are two bonds outstanding:

$1)2,00020$ year bonds issued $5$ years ago with a coupon rate of $4\mathrm{.}25\%$ with today's market rate $=3\mathrm{.}75\%$

$2)2,50015-$year bonds issued $3$ years ago with a coupon rate of $3\mathrm{.}88\%$ with today's market rate $=3\mathrm{.}6\%$

Company estimates its return on equity is $12\%$