Capone Ltd is contemplating a 3-year project that will have sales that will grow 6 percent per year from a year 1 figure of $51 million and cash costs that will grow at 3 percent a year from a year 1 figure of $13 million. Machinery that needs to be purchased will cost $30 million and will last 3 years and is depreciated by the straight-line method to zero. This equipment will realise $5 million (pre-tax and in today's dollars) when resold at the end of the project. The annual inflation rate is expected to be 2.5 percent and the Capone Ltd project has a WACC of 8 percent in real terms (as distinct from nominal); and the corporate tax rate and capital gains tax rate are both 24 percent. The NWC required each year is 10 percent of expected annual sales. - Required: (a) What is the nominal after-tax cash flow from operations (CFAT) for each of the three years? - (3 marks) - (b) What is WACC in nominal terms? (2 marks) - 3 (c) What is the annual investment and its timing) in nominal terms each year for the net working capital requirement? (6 marks) - (d) What is the present value of this project AND would you accept or reject it? - (6 marks) - (e) What is the real depreciation tax shield for each of the three years