You have been hired by a food company, Kokomochi, in their capital budgeting division. Kokomochi is considering the launch of its new diet product, the snack bar. Kokomochi plans to spend USD1.2 million on product development and USD12.1 million on new machine purchase this year. The firm expectes that sales of the new product will be 20.5 million per year. The new machine will be depreciated straight line to a salvae value of zero at the end of year five. After five years, the firm will stop producing the snak bar and launch another new product. There is no increase of net working capital. The corporate tax rate is 35%

1. Calculate the free cash flow for this project for next year?

A) 15.75 million

B) -12.88 million

C) 7.2 million

D) 13.33 million

2. If the project is financed all by equity, the beta of kokomochi's stocks is 1.2. The expected market premium is 5%. The risk-free rate is 3.4%. What is the cost of capital of the new project?

A) 5.32%

B) 9.40%

C) 6.0%

D) 1.92%

3. What is the closetst NPV of this project?

A) 47.75%

B) 54.71%

C) 60.63%

D) 66.34%