There is an investment project that requires an upfront apital investment of 12, which is depreciated in a straight-line over 5 years. Furthermore, in year 1 net working capital increases by 10 and in year 5 this extra net working capital is returned. The project generates the following EBIT: Time 1 2 3 4 5 EBIT 1 2 3 4 5 The Bu of the project is 1.2, the risk-free interest rate is 2%, and the market risk premium is 5%. The corporate tax rate is 20%. a. What is the free cash flow that the company generates in each year? The firm wants to keep a constant debt-to-equity ratio of 0.5 and given this debt-to- equity ratio debt is risk-free. b. What the race? c. What is NPV of the levered project? Assume now that instead of keeping a constant debt-to-equity ratio the firm wants to issue risk-free debt worth 5 that matures in 5 years and makes coupon payments in each of the next 5 years. d. What is NPV of the unlevered project? e. What is NPV of the levered project