You have accepted a job offer and just started working for Walter White Chemicals (WWC) Co. Ltd., a medium sized publicly traded company that offers production of plastics, chemicals, and agricultural products for its customers. Your boss tells you that your first job is to conduct a financial analysis to determine the most WWC should pay to acquire a new production line in Albuquerque, NM. The new production line is expected to generate cash flows of $1.5 million per year over the next ten years. WWCs cost of equity capital is 14 percent and its cost of debt is 5 percent on an after-tax basis. The firms capital structure consists of $100 million in equity and $150 million dollars in debt.

A. Calculate the WACC for WWC. Show your work.

B. What is the most WWC should pay for the new production line per its required return (WACC)? Explain your answer using either mathematical formula or financial calculator strokes.

C. If purchase price of the new production line is $8,500,000, should WWC go ahead with purchasing the new production line? Explain your answer.