I need help with the following question: Replacement of old equipment for newer and more efficient equipment is expected to yield annual total after-tax cost savings (including any tax shields from depreciation) resulting in operational cash flows of $14 million for 12 years, starting t=1. The new equipment has a cost of $80 million and is depreciated over 10 year according to straight-line methodology. The salvage value at t=12 is $15 million. The corporate tax rate is 30% and the firm has a target debt-to-equity ratio of 0.5. Creditors require 12% return on their debt and the equity beta of the firm is 1.8. The expected return on the S&P 500 index is 12% and on a t-bill is 4%.

a)What are the relevant cash flows during each year (t=0,12)?

b) What is the firm's target debt-to-value (leverage) ratio?

c)What is the firm's cost of equity?

d) What is the firm's cost of debt?

e)What is the weighted average cost of capital (Rwacc)?

f)What is the beta for the entire firmnot just its equity?

g) What is the NPV of this project and should they accept it?