Your corporation is considering investing in a new product line. The annual revenues for the new product line are expected to be $388,000.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $66,300.00. The old equipment currently has no market value. The new equipment cost $67,300.00. 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 $31,300.00. An increase in net working capital of $58,000.00 is also required for the life of the project. The corporation has a beta of 1.9, a tax rate of 33%, and a target capital structure consisting of 55% equity and 45% debt. Treasury securities have a yield of 1.2% and the expected return on the market is 9.4%. In addition, the company currently has outstanding bonds that have a yield to maturity of 7.1%.

Question 1: What is the total initial cash outflow? (Calculate your answer to the nearest dollar; show your answer as a negative number.)

Question 2: What are the estimated annual operating cash flows? (Calculate your answer to the nearest dollar.)

Question 3: What is the terminal cash flow? (Calculate your answer to the nearest dollar.)

Question 4: What is the corporation's cost of equity? (Calculate your answer to four decimal points.)

Question 5: What is the WACC? (Calculate your answer to four decimal points.)

Question 6: What is the NPV for this project? (Calculate your answer to the nearest dollar.)