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{.}65$ million after taxes. In five years, the land will be worth $$7\mathrm{.}95$ million after taxes. The company wants to build its new manufacturing plant on this land; the plant will cost $$13\mathrm{.}2$ million to bulld. The following market data on DEI's securities are current:

$\backslash$table$[[$Debt:$,\backslash$table$[[91,000\mathrm{.}6\mathrm{.}8$ percent coupon bonds outstanding, $27$ years to maturity,$],[$selling for $94\mathrm{.}5$ percent of par; the bonds have a $$1,000$ par value each$],[$and make semiannual payments.$]]],[$Common stock:,$\backslash$table$[[1,58e,000$ shares outstanding, selling for $$94\mathrm{.}50$ per share; the beta is$],[1\mathrm{.}25.]]],[$Preferred stock:,$\backslash$table$[[74,0$ shares of $6\mathrm{.}2$ percent preferred stock outstanding, selling for$],[$$$92\mathrm{.}58$ per share.$]]],[$Morket:$,6\mathrm{.}8$ percent expected market risk premium; $5\mathrm{.}1$ percent risk$-$free rate.$]]$

DEI's tax rate is $25$ percent. The project requires $$850,000$ 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 ralsed 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 DEl, primarly because the plant is belng 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 DEI's project.

Note: Do not round Intermedlate 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$-$IIne depreclation. At the end of the project $($I$.$e$.,$ the end of Year $5),$ the plant can be scrapped for $$1\mathrm{.}55$ million. What is the aftertax salvage value of this manufacturing plant?

Note: Do not round intermedlate calculations and enter your answer In dollars, not milllons of dollars, e$.$g$.,1,234,567.$

d$.$ The company will Incur $$2,350,000$ in annual fixed costs. The plan is to manufacture $13,500$ RDSs per year and sell them at $$10,900$ per machine; the variable production costs are $$10,100$ 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 Intermedlate 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 intermedlate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

Answer is not complete.

$\backslash$table$[[$a$.$ Time $0$ cash flow,$$,-21,700,000,],[$b$.$ Discount rate,,,$\%$