These are the cash flows.

Year	0	1	2	3	4	5	6
Revenue		3.2000	4.0000	5.6000	5.6000	4.0000	2.4000
Expenses		.7200	.9000	1.2600	1.2600	.9000	.5400
Depreciation		.9500	.9500	.9500	.9500	.9500	.9500
Pretax profit		1.5300	2.1500	3.3900	3.3900	2.1500	.9100
Tax		.5355	.7525	1.1865	1.1865	.7525	.3185
Net income		.9945	1.3975	2.2035	2.2035	1.3975	.5915
OCF		1.9445	2.3475	3.1535	3.1535	2.3475	1.5415
Cash flow investment	5.7000						.4362
Change in NWC	.3200	.0800	.1600	0.0000	.1600	.1600	.2400
OCF	0.0000	1.9445	2.3475	3.1535	3.1535	2.3475	1.5415
Total cash flow	6.0200	1.8645	2.1875	3.1535	3.3135	2.5075	2.2177

Use this detail to determine answers to the questions below.

Rays Racks is a publicly traded company. The current stock price is $3.00 per share, and there are 20 million shares outstanding. The present value of the companys debt is $40,000,000. The company has a bond issue outstanding with 6 years to maturity. The face value is $1,000, the coupon rate is 8% (paid quarterly), and the bond is currently selling for $1,020. The companys corporate tax rate is 35% and their beta is 1.41. The current risk free rate is 5%, and the historic market return is 12%.

NOTE: It is critical that you do not round intermediate calculations. For example, while you may provide the after-tax cost of debt rounded to two decimal places, DO NOT calculate the WACC using rounded numbers. DO NOT calculate the NPV using a WACC that was rounded to two decimal places. These will give you incorrect answers. Provide each answer as requested, but DO NOT round intermediate calculations.

Question 1. What is the weighting to be used for equity in the WACC calculation?

Question 2. What is the weighting to be used for debt in the WACC calculation?

Question 3. What is the project's NPV?