Project A:This project requires an initial investment of $$20,000,000$ in equipment which will cost an additional $$3,000,000$ to install. The firm will use the attached MACRS depreciation schedule to expense this equipment. Once the equipment is installed, the company will need to increase raw goods inventory by $$5,000,000,$ but it will also see an increase in accounts payable of $$1,500,000.$ With this investment, the project will last $6$ years at which time the market value for the equipment will be $$1,000,000.$The project will produce a product with a sales price of $$20\mathrm{.}00$ per unit and the variable cost per unit will be $$10\mathrm{.}00.$ It is estimated the sales volume for this project will be $700,000$ in year $1,1,000,000$ in year $2,650,000$ in year $3,700,000$ in year $4,650,000$ in year $5$ and $550,000$ in year $6.$ The fixed costs would be $$2,000,000$ per year. Because this project could use some existing company infrastructure, management has expressed some favoritism towards this project and as allowed for a reduced rate of return of $2$ percentage point below its current WACC as the valuation hurdle it must meet or surpass.Project B:This project requires an initial investment of $$20,000,000$ in equipment which will require additional expense of $$1,000,000$ to install in the current facility. Consistent with other projects, the equipment will be depreciated using the MACRS Investment Class schedule. Once installed, the firm will need to increase inventory by $$6,000,000.$ The project will last $6$ years, but at the end of that period, the equipment will have no salvage value.During the operational period of this project, the product produced will sell for $$6\mathrm{.}50$ per unit. The costs related to this product will be $$4\mathrm{.}00$ per unit in variable cost and the fixed costs each year will be $$1,000,000.$ Management has estimated that the sales volume for this project will be $3,500,000$ in year $1,4,000,000$ in year $2,4,250,000$ in year $3,4,500,000$ in year $4,4,300,000$ in year $5,$ and $4,200,000$ in year $6.$ Since this project has been brought under consideration through the normal channels, a discount rate equal to the WACC should be used in the project valuation.Project C:This project is significantly outside of the normal products sold of the firm. The project is a reconsideration of a project proposed two years ago by a former manager. At that time a marketing study costing $$200,000$ was done; however, the project was not undertaken. Now the firm needs to consider if this project is worth the firms capital investment dollars. This project would require investment in equipment of $$20,000,000$ with an additional cost of $$5,000,000$ in installation fees. The project will be depreciated using the MACRS schedule. At the end of the project, management estimates that theequipment could be sold at a market value of $$5,000,000.$ This project also creates a need to increase raw goods inventory by $$6,000,000.$During the operational cycle of this project, the product would have a sales price of $$90\mathrm{.}00$ per unit. Costs associated with this project would be $$65\mathrm{.}00$ in variable cost per unit and a fixed cost per year of $$5,000,000.$ Management estimates that the sales volume would be $500,000$ units in year $1,600,000$ units in year $2,700,000$ units in year $3,800,000$ units in year $4,800,000$ units in year $5,$ and $600,000$ units in year $6.$ Because management is uneasy with undertaking a project so far outside of its normal product portfolio, it is imposing a $3-$percentage$-$point premium above the WACC as the required rate of return on the project.Modified Accelerated Cost Recovery System $($MACRS$)$ OwnershipYear Depreciation Schedule$5-$Year Investment Class $120\%232\%319\%412\%511\%66\%$Total $=100\%$Requirements$1.$ Calculate the costs of the individual capital components:a$.$ Before$-$tax cost of long$-$term debtb. After$-$tax cost of long$-$term debtc. Cost of preferred stockd. Average cost of retained earnings $($average of both values below$)$i$.$ Capital Asset Pricing Model methodii. Dividend Discount Model method$2.$ Determine the target percentages for the optimal capital structure, and thencompute the WACC. $($Carry weights to four decimal places. For example: $0\mathrm{.}2973$or $29\mathrm{.}73\%)3.$ Create a valuation spreadsheet for each of the projects mentioned above.Evaluate each project according to the following valuation methods:a$.$ Net Present Value of Discounted Cash Flowb. Internal Rate of Returnc. Modified Internal Rate of Returnd. Payback Period $4.$ Recommendations: Provide a written synopsis evaluation of each project and provide your recommendation of which of the projects management should accept for its capital expenditures budget for the upcoming year.