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Your corporation is considering investing in a new product line. The annual revenues ( sales ) for the new product line are expected to be

Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be
$129,769.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are
expected to be $48,823.00. The old equipment currently has no market value. The new equipment cost $64,497.00. The new equipment
will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is
expected to have a salvage value of $10,254.00. An increase in net working capital of $54,134.00 is also required for the life of the
project. The corporation has a beta of 1.495, a tax rate of 30.45%, and a target capital structure consisting of 68.82% equity and
31.18% debt. Treasury securities have a yield of 3.64% and the expected return on the market is 8.89%. In addition, the company
currently has outstanding bonds that have a yield to maturity of 6.49%.
For answers that are dollar amounts, please round to the nearest two decimal places. For answers that are a percentage, please be sure to
enter your answer as a percentage (for example, .1234 becomes 12.34%).
A. What is the total initial cash outflow? (show as negative number):
B. What are the estimated annual operating cash flows? $
C. What is the terminal cash flow? $
D. What is the corporations cost of equity? $
E. What is the WACC?
%
F. What is the NPV for this project? $
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