HM, Inc. is considering building a plant on land they bought two years ago for $500,000. You have been provided the following pieces of information to find the NPV and IRR of the project. The expansion will require the purchase of machinery costing $40,000,000. The market value of the land is $750,000. The estimated value of the land 20 years from today is $2,000,000. a. b. c. The firm has spent $250,000 to train workers to use the new machinery d. The sales from this project will be $15 million per year, of which 6% comes from lost sales of existing products. Costs associated with this level of sales will be $7,000,000. The company uses straight-line depreciation. The proiect has an economic life of 20 vears and the machinery will depreciate to a book value of $4,000,000 and be sold for that amount in year 20 e. f. Because of the project, the company will need additional working capital of $1,500,000 g. HM's stock price is $34.50. They just paid a dividend of $3 and the market consensus is h. HM's bonds sell for &970. They pay semi-annually, have 7 years to maturity, a coupon i, HM's marginal tax rate is 40%. which can be liquidated at the end of 20 vears for constant 5% dividend growth forever. rate of 4% and par value of $1,000. Their target capital structure is 70% equity and 30% debt. j. Questions 1. 2. 3. 4. 5. 6. What is the cost of capital using WACC? What is the initial CF? What is the incremental annual CF? What is the ending CF? What is the NPV for this project? What is the IRR for this project