INCLUDE FINANCIAL CALCULATOR SOLUTIONS OR WORKED OUT SOLUTIONS IF POSSIBLE: Sunny Inc. is trying to decide whether investing in Project A is a good idea. This project will last $5$ years and will not exist after that. Any salvage value will be considered as additional cash flow to be added to the $5$th year$$s free cash flow. The project requires a $$1,000,000$ initial investment $($today$)$ and has the following projected free cash flows. The project is expected to have a salvage value of $$200,000($at the end of $5$th year$)$

Year $1$:$$ $$300,000$

Year $2$:$$ $$350,000$

Year $3$: $$ Nothing

Year $4$: $$ $$450,000$

Year $5$:$$ $$250,000$

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Sunny Inc provides the additional information:

D$/$E ratio: $0\mathrm{.}7$

Tax Rate: $20\%$

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Most recent bond with a face value of $$1000$ sold for $$950.$ This bond pays yearly coupon payments and the coupon rate is $6\%.$ The bond has a remaining maturity of $15$ years.

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The beta for Sunny Inc. is $2.$ The S&P $500$ has an expected return of $12\%$ and the t$-$bill is $3\%.$

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Please answer the following questions and show work

Q$1)$ Please calculate the Cost of Debt $($not taking taxes into consideration$)$

Q$2)$ Please calculate Cost of Equity $($using the CAPM method$)$

Q$3)$ Please calculate WACC

Q$4)$ Please calculate NPV $($remember to include the salvage value as part of the $5$th year$$s cash flow$)$

Q$5)$ Please calculate IRR

Q$6)$ Is this a good investment for Sunny Inc.? Why or why not?