ABC, Inc is considering launching a new product which incurred $2 million in Research and Development expenses over the last year. The company will spend $1.5 million to acquire the equipment necessary for the manufacture of the new product. The equipment will last for 15 years and have a salvage value of $35,000. It will be depreciated to zero over 10 years using straight line depreciation. The company will also have an increase of $250,000 in accounts receivable and a decrease of $75,000 in accounts payable. The company anticipates to produce 100,000 units every year for the next 15 years and sell the units for $4 per unit. The variable costs are $0.25 per unit and the annual fixed costs are projected to be $10,000 per year. The company has a target capital structure of 35% debt and 65% equity. The companys outstanding bonds have a yield to maturity of 6% and the companys tax rate is 30%. The company has a beta of 1.4, the risk free rate is 2% and the market risk premium is 6.5%. Answer the questions below and show all the formulae you used and all the calculations. Show your work! **Must be in Excel format**

What is the projects cash flow at time 0?

What is the after tax operating cash flow in years 1 through 10?

What is the after tax operating cash flow in years 11 through 14?

What is the after tax cash flow in year 15?

What is the companys cost of equity?

What is the companys WACC?

What is the NPV of the project?

What is the IRR of the project?

What is the profitability index?

Should the company launch the new product?