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# The question is as follows:A project requires initial investment of $35,000 and will generate

**The question is as follows:**

A project requires initial investment of $35,000 and will generate

annual before-tax cash flow of $4,750 for 60 years. The asset beta of the project is 0.9. The market risk premium is 6% and the risk-free rate is 5%. The project will be financed at its target debt-to-equity ratio of 0.25. The cost of debt is 8%.The tax rate is 30%..

Assume the debt will be paid off at the end of year 60 when the project ends. **Find the amount of debt to borrow. **