$7.$ Consider the project described in Problem $6.$ Assume that the firm plans to finance $40\%$ of its net capital expenditure and working capital needs with debt.

a$.$ Estimate the free cash flow to equity for each of the four years.

b$.$ Estimate the payback period for equity investors in the firm.

c$.$ Estimate the NPV to equity investors if the cost of equity is $16\%.$ Would you accept the project?

d$.$ Estimate the IRR to equity investors in the firm. Would you accept the project?

This is $6!!6.$ You are provided with the projected income statements for a project: Year $1234$ Revenues $($$$)$ $$10,000$ $$11,000$ $$12,000$ $$13,000$ Cost of goods sold $($$$)$ $$4,000$ $$4,400$ $$4,800$ $$5,200$ Depreciation $$4,000$ $$3,000$ $$2,000$ $$1,000=$ EBIT $$2,000$ $$3,600$ $$5,200$ $$6,800$ The tax rate is $40\%.$ The project required an initial investment of $$15,000$ and an additional investment of $$2,000$ at the end of year two. $$ The working capital is anticipated to be $10\%$ of revenues, and the working capital investment has to be made at the beginning of each period.