Debt outstanding: $400 million

Before-tax cost of debt: 5%

Market cap: $7,500 million

Cost of common stock: 8%

Tax rate: 21%

Over the next five years EBIT will equal: 20 million each year.

An investment of $25 million is required in net working capital at the beginning of the project,

which will be recovered at the end of the project.

The cost of the equipment will be $90 million depreciated using straight-line to zero over the project's life, with no salvage value.

The project requires an additional 1% risk premium above the firms WACC.

Calculate the WACC:

Calculate Net Present Value:

Calculate Operating Cash Flows for year one