You were hired to evaluate Frost incs expansion project. Suppose that Frost expects the project's cash flow from operations to be $82,000 for 6 years. The project will also require additional capital expenditures of $30,000 every year. You were also told that the firm last paid a $1.3 dividend (D0 = $1.3). The dividend is expected to grow at a constant rate of 6 percent a year, and the common stock currently sells for $42 a share. The after-tax cost of debt is 7.5 percent, and the tax rate is 35 percent. Frost's target capital structure consists of 60 percent debt and 40 percent common equity.

What is the yearly free cash flow on the expansion project? Show all your work.

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

If the project's initial investment is estimated at $150,000, should Frost expand? why? Explain using the appropriate equations. Show all your work.

What is the profitability index for this project? Show all your work.

Suppose that due to some bad economic news, Frosts stock price decreases to $25 per share. Would this affect their expansion decision? Why or why not? Show all your work.