Compute the annual cash flow for years 1-5 the and weighted average cost of capital.

Ferris Company is considering investing in new equipments that would cost $80,000 and have a 5-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are as follows: The company has a debt to equity ratio of 1.5 (1.5 to 1). The pre-tax cost of debt is 10% and the cost of equity is 16%