o The useful life of property, plant & equipment items is assumed to be the project's life. o The project's discount rate will be the weighted average cost of capital. o Annual interest payments on debt used to finance this project would be a tax-deductible expense. o All purchases and sales are on a cash basis. Instructions: 1. Calculate the Weighted Average Cost of Capital (WACC) for the project. Hint: Use dividend capitalization model (constant growth model) to calculate cost of equity. 2. Determine the investment cost of the project 3. Prepare the projected income statement for each of the five years 4. Determine the relevant cash inflows of the project for each of the five years 5. Determine the relevant cash outflows of the project for each of the five years 6. Determine the net cash flows of the project for each of the five years 7. Evaluate the feasibility of the project using a. Payback period method where the acceptable time limit is 2 years b. NPV C. IRR