Q5) Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be $143,421.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $57,088.00. The old equipment currently has no market value. The new equipment cost $87,748.00. The new equipment will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is expected to have a salvage value of $23,628.00. An increase in net working capital of $59,510.00 is also required for the life of the project. The corporation has a beta of 1.074 , a tax rate of 40.14% , and a target capital structure consisting of 34.45% equity and 65.55% debt. Treasury securities have a yield of 2.84% and the expected return on the market is 12.50% . In addition, the company currently has outstanding bonds that have a yield to maturity of 5.00%.

e) What is the WACC? (2.5 points)

f) What is the NPV for this project? (2.5 points)