Perella Inc. is a producer of headsets and considering launching a new line of headsets. The project requires $500k in capital expenditures upfront in year 0 (which is the current year), which will be depreciated straight line over 2 years to a value of zero (i.e., depreciation in year 1 and year 2 will be $250k ). Production will begin soon: sales are expected to be $600k every year starting from year 1 till infinity; operating costs are expected to be $280k every year starting from year 1 till infinity; net working capital are expected to be $30k starting from year 1 till infinity. Corporate tax rate is 40% Panasound is a public company that produces headsets. Panasound is a levered firm: its cost of equity is 18%, cost of debt is 6%, and its debt-to-firm value ratio is 1/3 (i.e., D+ED=1/3 ). (a) Find free cash flows (FCFs) from the project in year 0 , year 1, year 2, and year 3. (3 pts) (b) Suppose Perella Inc. is an all-equity firm and finances its project with equity only. What is the NPV of this project? ( 5pts) (c) Suppose Perella Inc, is a levered firm: it maintains a constant debt-to-equity ratio of 1/2 and finances its project with this debt-to-equity ratio. What is the NPV of this project? (5 pts)