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The Animation Pictures Ltd. is a publicly listed company that operates in the entertainment industry. As of May 22nd, 2019 the company has no preferred shares outstanding and only contains ordinary equity and debt as part of its capital structure. The Animation Pictures Ltd. is subject to a 20% corporate tax rate. The firm has recently issued 10-year bonds to its debtholders. There are 3,100 of such bonds outstanding in the market. The company has to make 7% coupon payments twice a year. The current going rate for bonds of a similar risk profile and of a similar maturity is 6%. The Animation Pictures Ltd. does not issue preferred stock and only has 200,000 ordinary shares outstanding at the Dubai Financial Market. The current share price of the firms common stock is $30. The firms management has made an announcement that the company will pay a $4 dividend per share at the end of this month, which is expected to grow by 5% per year after that indefinitely. The company CEO has recently announced the firm is considering expanding into the new field of digital design, where they will need to buy a new asset a 3D printer. They have named the 3D printer initiative KOA Canvas, which will last for 5 years and cost the company $900,000 to purchase (only $100,000 can be recovered at the end of the assets useful life). The firms engineering department has determined that the KOA Canvas printer will be worth $100,000 after they use it for 5 years. They have already found a potential cash buyer who will purchase it from them for this price, and the contract has been signed between the two parties. Since the 3D printer needs to be installed by a specialist company, the Animation Pictures Ltd. has to pay $50,000 as installation costs , which cannot be recovered at the end of the assets useful life. The KOA Canvas project is expected to generate the Earnings Before Interest, Tax, Depreciation and Amortization of $500,000 per year for the next 5 years. Additionally, at the start of the project, the companys Accounts Payable and Accounts Receivable will rise by $80,000 and by $200,000, accordingly (both of which will be reversed at the end of the projects life). a. Compute the Cash Flow generated from Assets (CFA) for the KOA Canvas project. Show all the formulas used, workings, intermediate calculations, along with the final answer. (2 points) b. Determine the Weighted Average Cost of Capital (WACC) for the KOA Canvas project. Show all the formulas used, workings, intermediate calculations, along with the final answer. (2 points) c. Calculate the Net Present Value (NPV) for the Animation Pictures Ltd. AND write a recommendation letter to the companys management on whether should go ahead with the KOA Canvas project. Explain why the company should accept/reject this investment initiative. Show all the formulas used, workings, intermediate calculations, along with the final answer.

The a, b, c part is what they want. Everything above is the question.