Your company has a equity beta of 1.2. There are 4 million shares outstanding. Stock price is $15. Return to market and risk free rates are 8% and 3% respectively. YTM of the corporate debt is 6%. There is $40 million debt. The company has also 2 million preferred stock. Each preferred stock is $20 and pays $2 dividend every year. The company invested $10 million in marketing campaign to assess the demand for the product finish. This product will be in the market next year and will last five years. Revenues are projected to be $25 million per year along with expenses of $8 million. You will need to spend $5 million immediately on equipment that will be depreciated using 5 year MACRS depreciation to zero. The equipment will be put in use by the end of year zero. Additionally, you will use some fully depreciated existing equipment that has a market value of $2 million. Finally, the working capital levels will increase from their current level of $2 million to $10 million immediately. They will remain at the elevated level until year 5, when they will return to $5 million. Its tax rate is 30%.

a. Calculate the free cash flow of the project for each year.

b. Calculate WACC of this firm. Please

c. Calculate NPV of the project. Will you accept the project?

d. Calculate IRR of the project