2. (Free Cash Flows) Procter&Gamble (P&G) wants to become a zero net emission business in 4 years and considers switching to a new environment friendly production technology. Currently, the expected annual total costs of production of P&G are $10 million with the beta of costs equal to 0.7. The new technology will be gradually implemented in all production lines and would require an annual capital expenditure of $2 million for the first 4 years, which is not depreciated and is written off in the same year as production costs. The expected cost savings compared to existing technology are $200,000 in year 1, $400,000 in year 2, $600,000 in year 3, $800,000 in year 4. Starting from year 5 when the technology is fully implemented, the expected annual cost savings are $1,000,000. The beta of the new technology is 0.6. P&G's marginal tax rate is 25%. In your calculations, suppose that risk free rate is 2% and the market risk premium equals 4%. (a) Compute the NPV of implementing the new technology and make a recommendation to P&G of whether it should implement it or not (Hint: Use Excel) (b) Suppose that P&G negotiated a deal with its suppliers that if it implements a new technology, then P&G gets a trade credit which amounts to 35% of its costs. Re-do the exercise in part (a) under this alternative assumption. (c) Re-do the exercise in parts (a) and (b) under a higher marginal tax rate of 35%. Does higher tax rate make the new green techology more or less appealing