As of late $2019,$ Toyota Motor Corporation has twelve engineering and manufacturing facilities in the United

States. Recently, Toyota has been considering expanding the production of their gas$-$ electric hybrid drive

systems in the U$.$S$.$ To enable the expansion, they are contemplating investing

$$1\mathrm{.}5$ billion at the end of $2021($Year $0)$ in a new plant with an expected $10-$year life. In the meantime, they

also need to invest $$30$ million upfront in net working capital before the production can take place.

The projected financials of the new project for the Year $1$ operation $(2022)$ are as follows:

Earnings before interest and taxes $($EBIT$)$:

$$170$ million

Depreciation expense:

$$150$ million

Increase in net working capital:

$$40$ million

The anticipated unlevered free cash flows from the new plant will grow by $5\%$ for each of the next two years

$($Years $2$ and $3)$ and then $2\%$ per year for the remaining seven years. As a newly hired MBA in the capital

budgeting division you have been asked to evaluate the new project using the WACC method. You will

estimate the cash flows and compute the appropriate cost of capital and the net present values. You must

seek out the information necessary to value the free cash flows but will be provided some directions to

follow. Assume that corporate tax rate is $21\%.$