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Suppose a firm financed with a $150 million perpetual debt, and with 10 million shares each...

Suppose a firm financed with a $150 million perpetual debt, and with 10 million shares each worth $15. The expected return on the debt is 8% and the expected return on equity is 16%. The tax rate is 40%. The company is also considering a second project. The project requires an initial investment of $75 million, and will generate an annual pretax cash flow of $19.5 million in perpetuity. The risk of the project is the same as that of the firm's first project. What is the new value of the firm?

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