You are a consultant who has been hired to evaluate a new product line for Markum Enterprises. The upfront investment required to launch the product line is $7 million.

The product will generate free cash flow of $0.76 million the first year, and this free cash flow is expected to grow at a rate of 4% per year. Markum has an equity cost of capital of 10.7%, a debt cost of capital of 5.99%, and a tax rate of 35%. Markum maintains a debt-equity ratio of 0.70.

1. What is the NPV of the new product line (including any tax shields from leverage)?
2. How much debt will Markum initially take on as a result of launching this product line?
3. How much of the product line's value is attributable to the present value of interest tax shields?

You are a consultant who has been hired to evaluate a new product line for Markam Entarprises. The upfront investment required to launch the pror The prodact will generate free cash flow of $0.76 milion the first yeas, and this free cash flow is expected to grow at a rate of 4% per year. Markurn has an equity cost of capitat of 10.7% a debt cost of copital of 5.99%, and a tax rate of 35%. Narkum maintains a debl-equity ratio of 0.70 . a. What is the NPV of the new product line (including any tax shields trom leverage)? b. How much debt will Markum initally take on as a result of launching this product ino? c. How much of the croduct line's value is atributabie to the oresent value of interest tax shields? a. What is the NPV of the new product ine (including any tax shieids from leveraga)? The NPV of the new product line is : million. (Round to two decinal dlaces) b. How much debd will Makum intially tako en as a result of launching this product line? Dets wil bes milion - Round to two decinal piaces) c. How muxh the product line's value is atiribuatio to the prosont value of inserest tax shiolds? The amount of the product line's value that is atribstable to the present value of interest tax shiekds is \$ minch. (Round to two decimal places )