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

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Your corporation is considering investing in a new product line.The annual revenues (sales) for the new product line are expectedto be $163,994.00 with variable costs equal to 50% of these sales.In addition annual fixed costs associated with this new productline are expected to be $56,720.00 . The old equipment currentlyhas no market value. The new equipment cost $74,629.00 . The newequipment will be depreciated to zero using straight-linedepreciation for the three-year life of the project. At the end ofthe project the equipment is expected to have a salvage value of$28,509.00 . An increase in net working capital of $66,220.00 isalso required for the life of the project. The corporation has abeta of 0.804 , a tax rate of 33.52% , and a target capitalstructure consisting of 61.43% equity and 38.57% debt. Treasurysecurities have a yield of 3.43% and the expected return on themarket is 12.00% . In addition, the company currently hasoutstanding bonds that have a yield to maturity of 8.36%.
a) What is the terminal cash flow?
b) What is the corporations cost of equity?
c) What is the WACC?
d) What is the NPV for this project?

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Your corporation is considering investing in a new product line.The annual revenues (sales) for the new product line are expectedto be $163,994.00 with variable costs equal to 50% of these sales.In addition annual fixed costs associated with this new productline are expected to be $56,720.00 . The old equipment currentlyhas no market value. The new equipment cost $74,629.00 . The newequipment will be depreciated to zero using straight-linedepreciation for the three-year life of the project. At the end ofthe project the equipment is expected to have a salvage value of$28,509.00 . An increase in net working capital of $66,220.00 isalso required for the life of the project. The corporation has abeta of 0.804 , a tax rate of 33.52% , and a target capitalstructure consisting of 61.43% equity and 38.57% debt. Treasurysecurities have a yield of 3.43% and the expected return on themarket is 12.00% . In addition, the company currently hasoutstanding bonds that have a yield to maturity of 8.36%.a) What is the terminal cash flow?b) What is the corporations cost of equity?c) What is the WACC?d) What is the NPV for this project?