The CEO of "GAP" asked you to analyze the possibility of acquiring a smaller business operation from another company. The purchase will cost $$65$ million in year zero and will also require $$2\mathrm{.}5$ million of net$-$working capital. The company is using MACRS $3$ years depreciation $($calculate straight$-$line depreciation in addition to MACRS as a bonus for extra points$-3$ points$),$ and a book value is $$7$ million. Assume you can sell the business in four years for $$15$ million.

The new business operation will generate $$50$ million in revenue each year, which will take $$30$ million in costs annually.

Use the $21\%$ marginal tax rate.

$(1)$ compute the cash flows and depreciation for the project.

$(2)$ Assume cost of dept is $1\mathrm{.}4\%,$ cost of capital$-$and financing between E and D is $35\%$ and $65\%$ accordingly, calculate WACC for your company.

$(3)$ Use the cost of capital calculated in #$2$ above and a payback benchmark of $2\mathrm{.}5$ years. Compute the following decision statistics and make accept$/$reject conclusion.

A$.$NPV

B$.$IRR

C$.$Payback

D$.$ Profitability index

E$.$ MIRR

$(4)$ Make a recommendation to the ceo explaining why and what decision should be made with regards to acquiring a small business operation from another company.

You can use the NPV$()$ function and IRR$()$ function to compute the NPV and IRR of the project.

create a spreadsheet that computes the answers, keeping all the formulas and calculations.