Please show formulas and calculations and not just results and numbers, and explain rationale for answers. Whenever applicable, interest is compounded annually and payments occur at the end of the period. Face value for bonds is $1000.

Flintstone Products is considering a new project that requires an investment of $24 million in machinery. This is expected to produce sales of $70 million per year for 3 years. Operating expenses are 80% of sales. The machinery will be fully depreciated to a zero-book value over 3 years using straight-line depreciation. There is no salvage value. There is an initial investment of $3 million in net operating working capital. At the end of year 3, the firm gets $2 million returned in net operating working capital. There is no other investment in net operating working capital. The tax rate is 40%. The unlevered cost of capital is 11%.

a. Calculate the base-case NPV (net present value).

b. The project will be financed with $10,000,000 in bonds; the remaining funds will come from retained earnings. The bonds have a 3-year life, an annual coupon rate of 6% and a yield of 6%. Find the adjusted present value (APV).