You were hired as a consultant to RRC Inc. which is considering taking a project that will produce $11 million of revenue per year for six years. Cash expenses will be $4 million, and depreciation expenses will be $1.5 million per year. You were also told that RRC's target capital structure is : 35 percent debt, 25 percent preferred, and 40 percent common equity. The cost of debt is 4.75 percent, and the cost of common equity is 12 percent. RRC recently paid a dividend of $5 per share on their preferred shares which are currently selling at $50 per share. RRC uses a 27 percent marginal tax rate.

1. What is the yearly free cash flow on the project? show all your work.

2. What is the firm's WACC? Show all your work.

3. Should the firm accept this project if it requires an initial investment of 30 million, Why or Why not? Explain. Show all your work.

4. What is the firm's IRR? would the expansion decision change if they used IRR to decide instead of NPV? Why or why not? Explain and show all your calculations.

5. What is the firm's MIRR? Based on your calculations, should the firm accept the project? Explain and show all your calculations.