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Suppose ABC firm is considering an investment that would extend the life of one of its facilities for 5 years. The project would require upfront

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Suppose ABC firm is considering an investment that would extend the life of one of its facilities for 5 years. The project would require upfront costs of $8M plus $(35+6)M investment in equipment. The equipment will be obsolete in (2+5) years and will be depreciated via straight-line over that period (Assume that the equipment can't be sold). During the next 5 years, ABC expects annual sales of (5+3+50)M per year from this facility. Material costs and operating expenses are expected to total (3+4063)M and (3+1+0.8)M, respectively, per year. ABC expects no net working capital requirements for the project, and it pays a tax rate of (30+6)%. ABC has (70+5)% of Equity and the remaining is in Debt. If the Cost of Equity and Debt are (5+8)% and 6% respectively, should they take the project? a) WACC (in percentage, thus 3.8% must be entered as 3.8 ); b) Incremental FCF at 0 ; c) Incremental FCF from year 1 to year 5 ; d) NPV. All dollars' answers must be submitted in DOLLARS, thus 4.56M must be entered as 4560000 . Round to the second decimal in each case. DO NOT PUT ANY UNITS IN YOUR ANSWERS

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