The machine has a useful life of 6 years and falls into the 5-year property class for depreciation. Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $100. The IRS MACRS schedule for the six years is 120%, 232%, 319.2%, 411.52%, and 5%. It will generate $50,000 per year of savings for Jake and can be sold for $50. Jake's corporate tax rate is 32%. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value. The bonds have 20 years to maturity and are selling for $45 per share. This stock has a beta of 2.75. Jake also has 70,000 shares of common stock outstanding that pays a 3.5% dividend and sells for $40 per share. Finally, Jake has 36,000 shares of preferred stock outstanding.