Given Data: Project Duration: 5 years Land Cost (historical): 3.7 million (3,700,000) Appraised Land Value (current): 4.5 million (4,500,000) Future Land Value (after years): 4.9 million (4,900,000) Plant and Equipment Cost: 31.36 million (31,360,000) Net Working Capital (NWC): 1,100,000 Debt: 111,000 bonds outstanding 7.2% Coupon Rate: (semiannual payments) Par Value: $200 Selling Price: 108% of par value Years to Maturity: 27 years Common Stock: 8,000,000 shares outstanding Stock Price: $70.20 per share Beta: 1.1 Preferred Stock: 442,000 shares outstanding Dividend: 6% of $100 par value Preferred Stock Price: $80.20 per share Market: Market Risk Premium: 7% Risk-Free Rate: 4% Flotation Costs: Common Stock: 6.5% Preferred Stock: 5.5%Debt: 4.5%Tax Rate: 23% Annual Fixed Costs: $600,000 Units to be Sold Annually (RDSs): 14,600 Price per RDS: $10,400 Variable Production Cost per RDS: $9,000 Depreciation Life: 8 years Salvage Value of Plant and Equipment (end of years 5): 5.4 million (5,400,000) Increased Risk Adjustment for the Overseas Project: 2% a. Calculate the projects initial Year 0 cash flow, taking into account all side effects. Assume that the net working capital will not require flotation costs. b. The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has told you to use an adjustment factor of 2 percent to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating DEIs project.c. The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (that is, the end of Year 5), the plant and equipment can be scrapped for $3.7 million. What is the after-tax salvage value of this plant and equipment? d. The company will incur $6,000,000 in annual fixed costs. The plan is to manufacture 14,600 RDSs per year and sell them at $10,400 per machine; the variable production costs are $9,000 per RDS. What is the annual operating cash flow (OCF) from this project? e. DEIs comptroller is primarily interested in the impact of DEIs investments on the bottom line of reported accounting statements. What will you tell her is the accounting break-even quantity of RDSs sold for this project? f. Finally, DEIs president wants you to throw all your calculations, assumptions, and everything else into the report for the chief financial officer; all he wants to know is what the RDS projects internal rate of return (IRR) and net present value (NPV) are.