Question: Philip's Hardware is a retail chain of specialty hardware stores. The firm has 24,000 shares of stock outstanding that are currently valued at $51 a share and provide a 12.6 percent rate of return. The firm also has 750 bonds outstanding that have a face value of $1,000, a market price of $1,004, and a 7.5 percent coupon. These bonds mature in 4.5 years and pay interest semiannually. The tax rate is 34 percent. Philip's Hardware is considering expanding by building a new superstore. The superstore will require an initial investment of $15.6 million and is expected to produce after tax cash inflows of $1.8 million annually over its 10-year life. The risks associated with the superstore are comparable to the risks of the firm's current operations. The initial investment will be depreciated on a straight line basis over the life of the project. At the end of the 10 years, the firm expects to sell the superstore for $12.5 million. Should Philip's Hardware accept or reject the superstore project and why?