Unless stated otherwise, interest is compounded annually, and payments occur at the end of the period. Face value for bonds is $$1000$

Mini Inc. is considering a new project. The equipment costs $$42$M$,$ will be depreciated on a straight$-$line basis over $3$ years to a zero$-$book value and can be sold for $5$M at the end of $3$ years. It will generate net operating profit after taxes $($NOPAT$)$ of $4\mathrm{.}5$M per year for $3$ years. There is no net working capital expenditure. The tax rate is $25\%.$

The target debt ratio $($D$/$V$)$ is $30\%$ debt and the rest from retained earnings.

$$ They currently have $3-$year debt that trades at a price of $$970$ per bond. The coupon rate is $5\mathrm{.}95\%,$ and coupons are annual. The face value is $$1000.$ The before$-$tax cost on any new bonds will be the same as the yield to maturity on the current bonds. Any issue costs are negligible.

$$ Analysts forecast a dividend of $$4\mathrm{.}75$ for next year and the current price is $$38$ per share. The growth rate is $3\%.$ Issue costs for common stock are $5\%.$

a$.$ Find the NPV of the project at the weighted average cost of capital $($WACC$).$

b$.$ Based on the NPV$,$ will they take the project? Explain.