AWS is contemplating setting up a manufacturing plant to produce a new line of radar systems. This is a five-year project. The company bought some land three years ago for $4.5 million in anticipation of using it for waste chemicals. If the land were sold today, the net proceeds would be $5.5 million after taxes. In five years, the land will be worth $5.8 million after taxes. The company wants to build its new manufacturing plant on the land; The plant will cost $21.2 million to build. AWS carries 60,000 bonds with 6.2% coupon rate outstanding. The bonds have 25 years to maturity, selling for 98% of par. The bonds have a $1000 par value each and make semiannual payments. AWS's current beta is 1.15. AWS has 1,350,000 common stock shares outstanding, selling for $97 per share. AWS has 90,000 shares of 5.7% preferred stock outstanding. The preferred stock has a par value of $100, selling for $95 per share. Currently, market conditions are such that the t-bond rate is 3.8%, and the expected market risk premium is 5.0%. AWSs tax rate is 25%. The project requires $825,000 in initial net working capital investment to get operational. All net working capital is recovered at the end of the project. AWS uses straight-line depreciation. At the end of year 5, the plant can be scrapped for $2.4 million. For this plant, AWS will incur $3.6 million in annual fixed costs. The plan is to manufacture 13,500 system per year and sell them at $10,800 per machine; the variable production costs are $9,000 per machine. Should AWS build this manufacturing plant?

a. What is the required return if AWS makes the investment?

Provide a detailed solution in the designated below, and include weight for each capital and cost of each capital in your answer.

B. What is the expected value of the investment?

C. Should AWS make the investment? Explain.

Provide a detailed solution in the designated below, and include a timeline of individual and total CFs in your answer.