The Mr. Belvedere Vodka Corporation wants to begin a new line of premium vodka. In order to do so, the company hired a consulting firm at a cost of $200,000 to run a feasibility report. The development of this new brand would require a purchase of a new factory along with heavy distilling equipment at a cost of $18 million. It would also require hiring new management for the life of the project that will cost $500,000 per year. The company predicts that sales will increase by $20 million per year, but at the same time, they also think the new vodka will taste so good that it will cut into sales of its standard vodka line at a cost of $7 million per year. The incremental cost to manufacture the new line of vodka is estimated at $10 million per year. The life of the project is estimated to be 8 years and depreciation is calculated using the straight-line method over the life of the project. The machinery and distilling equipment have a salvage value of $5 million. The level of working capital will need to increase by $2 million dollars in order to support the new line which will be liquedated at the finish of the project. The tax rate for Mr. Belvedere Vodka is 25%.

In order to finance the project, the company plans on raising the capital through 40% debt and 60% equity. Mr. Belvedere's Beta is equal to 1.1. The company currently has a 30 year bond with 10 years left until maturity with a coupon rate of 8% paid annually trading at a price of $1,034.32. No comparable project exists within the firm. Their new project is similiar to Premium Inc. who has a debt-to-equity ratio of 1.0 and a Beta of 1.4. The current risk free rate is 2% and the market risk premium is estimated to be 8%.

Please show all work (and use excel functions when needed):

Question 1: What is the required rate of return on the company's equity?

Question 2: What is the yield to maturity on their bond?

Question 3: What is the company's Weighted Average Cost of Capital (WACC)?

Question 4: What is the investing cash flow of the project?

Question 5: What is the yearly operating cash flow of the project?

Question 6: What is the Net Present Value (NPV) of the project?

Question 7: What is the Internal Rate of Return (IRR) of the project?

Question 8: What is the PI of the project?

Question 9: What is the payback period of the project?

Question 10: Should the project be accepted? (yes/no)

Thank you!