You are a consultant who was hired to evaluate a new product line for Gupta Enterprises. The upfront investment required to launch the product is $12million. The product will generate free cash flow of $0.78 million the first year, and this free cash flow is expected to grow at a rate of 6% per year. Gupta has an equity cost of capital of 10.8%, a debt cost of capital of 4.83%, and a tax rate of 42%. Gupta maintains a debt-equity ratio of 0.80.

Very IMPORTANT : Round to two decimal places.

a. What is the NPV of the new product line (including any tax shields from leverage)?

b. How much debt will Gupta initially take on as a result of launching this product line?

c. How much of the product line's value is attributable to the present value of interest tax shields?