Unless stated otherwise, interest is compounded annually, and payments occur at the end of the period. Face value for bonds is $$1000$

A firm is considering a new product for their kitchen line. The kitchen product requires a machine that costs $$120$M$.$ The machine will be depreciated on a straight$-$line basis to a zero$-$book value over $4$ years. Sales are expected to be $$300$M next year, and operating expenses $($excluding depreciation expense$)$ are $$265$M next year. Both sales and operating expenses are expected to increase by $10\%$ each year through year $4.$ The tax rate is $25\%.$

a$.$ Estimate the free cash flows for the project.

b$.$ The firm has two main lines: kitchen products and fitness equipment. The firm has an overall beta of $1\mathrm{.}0.$ The risk$-$free rate is $4\%$ and the market risk premium is $6\%.$ The kitchen products unit has a beta of $\mathrm{.}6,$ while the fitness unit has a beta of $1\mathrm{.}5.$ Use the capital asset pricing model to estimate the required return.