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To complete the project the firm will need to make an investment ( equipments ) of $ 9 , 0 0 0 in year 0

To complete the project the firm will need to make an investment (equipments) of $9,000 in year 0(year-end), $4,000 in year 2(year-end), $2000 in year 3(year-end). This specialized equipment can be depreciated using the straight-line method. The project is expected to generate revenue from year 1 through year 7. All equipments are expected to be abandoned at the end of the project. By environmental law, the company is required to remove the project after it is abandoned. The cost of removal is $1,000. The salvage value is expected to be zero. We assume All project revenues and expenses are incurred in the end of a year. Your sales and marketing team tell you that they estimate sales of 1,500 units in year 1, rising by roughly 50% per year through year 5, then declining by 50% in year 6 and 70% in year 7. They assume the product is dead at that point, with 0 units demanded/sold in year 8. The firm's nominal cost of debt is 5% and remain constant, while the cost of equity is forecasted to be 6% in year 1 and increase by 10% each year. The tax rate is estimated to be a level 20%. The cost of capital is calculated as the weighted average cost of capital (equity and debt).60% of the firm's capital comes from equity and 40% comes from bank loans. Sales revenue per unit is expected to be $10 from year 1 to year 7. Variable cost per unit is estimated at $5 from in 1 and increases by 10% through year 7. Cash fixed costs will be $7,000 in year 1 and declines by 5% through year 7.
QUESTION 7
(7) what is the WACC of the firm in year 7?(rounded to 2nd decimal place in a percentage)(e.g.,33.33%)
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