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Suppose that you are running a local coffee chain named JudyLee Coffee Corp. You are considering...

Suppose that you are running a local coffee chain named JudyLee Coffee Corp. You are considering a new project of opening a new shop in a newly developed town in near Toronto area.  The investment cost is expected to be 1.2 million dollars and will return 225,000 dollars for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%.

Will you adopt this project? Why or why not? Explain.

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