Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be $163,994.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $56,720.00 . The old equipment currently has no market value. The new equipment cost $74,629.00 . 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 $28,509.00 . An increase in net working capital of $66,220.00 is also required for the life of the project. The corporation has a beta of 0.804 , a tax rate of 33.52% , and a target capital structure consisting of 61.43% equity and 38.57% debt. Treasury securities have a yield of 3.43% and the expected return on the market is 12.00% . In addition, the company currently has outstanding bonds that have a yield to maturity of 8.36%.

a) What are the estimated annual operating cash flows?

b) What is the terminal cash flow?

c) What is the corporations cost of equity?