Suppose you have been hired as a financial consultant to Johnsons Inc., 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 $4.5 million. If the land were sold today, the net proceeds would be $5.5 million after taxes. In five years, the land will be worth $5.8 million after taxes. The company wants to build its new manufacturing plant on this land. The plant will cost $21.2 million to build. Following are some market data for Johnsons Inc. Debt: 60,000 shares of 6.2 percent coupon bonds outstanding, 25 years to maturity, selling for 98 percent of par value. The bonds have a $1,000 par value each and make semiannual coupon payments. Yield to maturity is 6.36%. Common stock: 1,350,000 shares outstanding, selling for $97 per share. The beta is 1.15. Preferred stock: 90,000 shares outstanding, with a dividend of $5.7 per share. Par value is $100, selling for $95 per share. Market: 7 percent expected market risk premium. 3.8 percent of risk-free rate. Tax rate is 25 percent. The project requires $825,000 in initial net working capital investment to get operational. A. Calculate the projects Time 0 cash flow. (4 marks) B. Assume that Johnsons Inc. is going to maintain the current capital structure, compute the weighted average cost of capital (WACC). (6 marks) C. The manufacturing plant has an eight-year tax life, and is 100 percent depreciated on the straight-line manner over its life. At the end of the project (the end of Year 5), the plant can be scrapped for $2.4 million. What is the after-tax salvage value of this manufacturing plant? (5 marks) D. The company will incur $3.6 million in annual fixed costs. The plan is to manufacture 13,500 RDSs per year and sell them at $10,800 per machine; the variable production costs are $9,900 per RDS. The manufacturing plant has an eight-year tax life, and is 100 percent depreciated on the straight-line manner over its life. What is the annual operating cash flow (OCF) for this project?