The ABC Corporation is considering the acquisition of a 4.7M upgrade of all machinery in the semi-conductor manufacturing division. ABC will use 2.2M of current cash reserves that is yielding 2.85% in the money market and the remaining 2.5M will be financed through debentures (corporate bonds). ABC will pay 5.15% coupon rate (interest rate) to these bondholders. In short, ABC is using 2.2M cash and 2.5M is being borrowed. The upgraded machinery has a 6-year useful life and a 700K residual value. The machinery is expected to bring in additional revenues of: Year 1: $700,000 Year 2: $725,000 Year 3: $775,000 Year 4: $800,000 Year 5: $850,000 Year 6: $1,000,000 1) Using Excel calculate: WACC and NPV manually (discounting each cash flow for NPV), as shown in the lecture video. 2) Using Excel, re-calculate NPV using the NPV equation. Make sure to get the same answer as above (see lecture video). 3) Using Excel, calculate IRR (see lecture video). 4) In your Excel worksheet, discuss whether ABC should invest or not invest in this capital expenditure. The Federal Reserve is now expected to implement contractionary monetary policy to fight inflation and raise interest rates 75 basis points (0.75%). Now, ABCs cash reserves in the money market will yield 3.6% (rather than 2.85%), and the cost of borrowing money through the bond issue is 5.9% (rather than 5.15%). 5) Using Excel calculate: WACC and NPV manually (discounting each cash flow for NPV), as shown in the lecture video. 6) Using Excel, re-calculate NPV using the NPV equation. Make sure to get the same answer as above (see lecture video). 7) Using Excel, calculate IRR (see lecture video). 8) **In your Excel worksheet, discuss whether ABC should invest or not invest in this capital expenditure now that the cost of capital is higher. Research our current state of the economy and the contractionary policy that many economists expect of the Fed. Discuss how a recession can intensify as a result. Include your findings from this problem to back up your statements. Be complete and thorough in your explanation.