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 manufacturing plant on this land; the plant will cost $$13\mathrm{.}44$ million to build. The following

market data on DEl's securities are current:

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$.,32\mathrm{.}16.$