Name: Xavier Student Ventures is deciding to launch a new line of action figures. These action figures will feature prominent Xavier Professors such as Professor Brain, Dr. Doom, Dr. P and Dr. O. They plan to sell the action figures for 5 years. The equipment to make the new action figures will cost $450,000 and the accountants say it should be depreciated on a straight-line basis to zero over 5 years. The marketing group thinks sales will be $200,000 per year, fixed costs will be $28,000 and variable costs will be 45% of sales. Xavier pennant sales are expected to drop by $40,000 with pre-tax profit loss of $17,000 They will need to invest $9,000 in working capital at the beginning of the project. They think they will be able to salvage the equipment at the end of the project for $14,000. The coupon rate on the debt is 6.50% and the yield to maturity on the firm's debt is 5.3%. The risk-free rate is 2%. The market risk premium is 6.3%. The stock's beta is 1.3. The Company has $1,400,000 market value of equity and $1,300,000 of debt outstanding. The tax rate is 33%. Fill in the pro forma worksheet and put your answers to the questions below in the highlighted cells. Pro Forma (7 pts) Year Sales Variable Costs Fixed Costs Depreciation Cannibalization EBIT Taxes OCF Equipment Salvage Value Working Capital Total CF 1 2 3 4 5 What is the Firm's cost of debt? What is the firm's cost of equity? What is the Weighted Average Cost of Capital? What is the After Tax Salvage Value? (What is the NPV? Should the Firm Take the Project? Why