Suppose you have been hired as a financial consultant to Defense Electronics, Incorporated $($DEI$),$ a large, publicly traded firm that is the market share leader in radar detection systems $($RDSs$).$ The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs$.$ This will be a five$-$year project. The company bought some land three years ago for $$7\mathrm{.}2$ million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. If the land were sold today, the net proceeds would be $$7\mathrm{.}71$ million after taxes. In five years, the land will be worth $$8\mathrm{.}01$ million after taxes. The company wants to build its new nyanufacturing plant on this land; the plant will cost $$13\mathrm{.}44$ million to build. The following market data on DEl's securities are current:

Debt:

$92,2006\mathrm{.}9$ percent coupon bonds outstanding, $23$ years to maturity, selling for $93\mathrm{.}9$ percent of par; the bonds have a $$1,000$ par value each and make semiannual payments.

Common stock: $1,700,000$ shares outstanding, selling for $$95\mathrm{.}10$ per share; the

Preferred stock: beta is $1\mathrm{.}18.$

Preferred stock: $,80,000$ shares of $6\mathrm{.}25$ percent preferred stock outstanding,

Market: selling for $$93\mathrm{.}10$ per share.

$7\mathrm{.}15$ percent expected market risk premium; $5\mathrm{.}05$ percent risk$-$free rate.

DEl's tax rate is $21$ percent. The project requires $$880,000$ in initial net working capital investment to get operational.

a$.$ Calculate the project's Time $0$ cash flow, taking into account all side effects. Assume that any NWC raised does not require floatation costs.

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e$.$g$.,1,234,567.$

b$.$ The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has told you to use an adjustment factor of $+2$ percent to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating DEl's project.

Note: Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

c$.$ The manufacturing plant has an eight$-$year tax life, and DEI uses straight$-$line depreciation. At the end of the project $($i$.$e$.,$ the end of Year $5),$ the plant can be scrapped for $$1\mathrm{.}61$ million. What is the aftertax salvage value of this manufacturing plant?

Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e$.$g$.,1,234,567.$

d$.$ The company will incur $$2,410,000$ in annual fixed costs. The plan is to manufacture $14,100$ RDSs per year and sell them at $$11,500$ per machine; the variable production costs are $$10,700$ per RDS$.$ What is the annual operating cash flow, OCF, from this project?

Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e$.$g$.,1,234,567.$

e$.$ Calculate the project's net present value.

Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89$

f$.$ Calculate the project's internal rate of return.

Note: Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$