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Burke Enterprises is considering a machine costing $30 billionthat will result in initial after-tax cash savings of $3.7 billionat the end of the first year, and these savings will grow at a rateof 2 percent per year for 11 years. After 11 years, the company cansell the parts for $5 billion. Burke has a target debt/equity ratioof 1.2, a beta of 1.79. You estimate that the return on the marketis 7.5% and T-bills are currently yielding 2.5%. Burke has twoissuances of bonds outstanding. The first has 200,000 bonds tradingat 98% of par, with coupons of 5%, face of $1000, and maturity of 5years. The second has 500,000 bonds trading at par, with coupons of7.5%, face of $1000, and maturity of 12 years. Kate, the CEO,usually applies an adjustment factor to the discount rate of +2 forsuch highly innovative projects. Should the company take on theproject?