7. The Jabez Corporation has asked for credit with your firm. Jabez has not done business with your firm previously, but you have a strong feeling that if the first order goes well they will become a repeat customer. The company's purchasing manager would like to buy some equipment today at a cost of $425,000, with 30 days credit. Your variable cost for that equipment is $411,500 and your monthly interest rate is 1.25 percent. Your research shows that the probability of default is 15 percent. What is the net present value of this decision? 8. The Lawrence Stone Age Pottery Co. receives 60 cheques per month from customers. Average payments and clearing times are as follows: five cheques for $21,000, 2.5 days; 15 cheques for $58,000, 3.5 days; 25 cheques for $37,000, four days; and fifteen cheques for $10,000, five days. Calculate the average daily float, assuming a 360-day year. 9. How does a cash concentration account work? How can a cash concentration account provide benefits for a company? 10. An internet service provider (ISP) needs new equipment - recent loss of service issues have caused some key customers to switch to other providers. The cost of the equipment is $15,000,000. It is estimated that the firm will save $5,000,000 annually, pre-tax, for the next 6 years by installing the equipment. The firm is financed with 35% debt and 65% equity, based on market values. The firm's cost of equity is 11% and its pre-tax cost of debt is 4%. The flotation costs of debt and equity are 2% and 6%, respectively. Assume the firm's tax rate is 30%. a. What is the firm's WACC? b. Ignoring flotation costs and using your answer from part (a) as the discount rate, what is the NPV of the proposed project? c. What is the weighted average flotation cost, fa, for the firm? d. What is the dollar flotation cost of the proposed financing? e. After considering flotation costs, what is the NPV of the proposed project