You are hired as a consultant and provided with the following information regarding WolfPac Co.

The company currently has 100,000 share of common stocks trading at a price of $60. The expected return is 18%.

The company's current debt (book value) is $4 million and was $6 million the year before. The interest paid duringlast year was $450,000.

The company had $4,000,000 last year in pre-tax profit, and paid tax of $1,000,000.

(1) What is the company's WACC?

(2) What is your suggestion to the company about a new project that requires investment of $380,000 and generates annual cash flow of $70,000 for the next 10 years? (Create the project's cash flow stream!)

(3) Show and explain how your answer to part (2) changes if the tax rate changes from 0% to 50% by 10%.