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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

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 $39M investment in equipment. The equipment will be obsolete in (8) 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 56M per year from this facility. Material costs and operating expenses are expected to total 33M and 1.08M, respectively, per year. ABC expects no net working capital requirements for the project, and it pays a tax rate of 38%. ABC has 76% of Equity and the remaining is in Debt. If the Cost of Equity and Debt are 14% 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.

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