1.KIMEP Company has the following incremental cash flows for its new project:

Year 0

Year 1

Year 2

Year 3

Category

T₀

T₁

T₂

T₃

Investment

-$4,000,000

NWC Change

-$300,000

$300,000

OCFs

$1,500,000

$1,500,000

$1,500,000

Salvage

$250,000

1)Should KIMEP Co. accept or reject this project at an adjusted WACC of 6% or 8% or 10%?

2) At what adjusted WACCs will the company accept this project? Hint: Find the IRR of the project and use it as the maximum adjusted WACC for accepting the project.

3)What is terminal Value if Growth rate of cash flow was 5%?

4)What is firm value if KIMEP has some assumption as follow?

Total Number of shares: 1,000,000

Total capital structure: 4,000,000

Debt/ Equity: 0.7

Cost of equity: 10%WACC: fromanswer 1) and 2)