BB Inc. hired you as a consultant to help decide on an expansion project. The project will produce $8 million of revenue per year for 9 years. Cash expenses will be $3.8 million, and depreciation expenses will be $1 million per year. The project will increase net working capital by $120,000 each year. The firm has a market value of outstanding debt of $25,000,000 and $15,000,000 in equity. The after-tax cost of debt is 5.5 percent, and the tax rate is 25 percent. The cost of equity is 11%

1.What is the yearly free cash flow on the project? Show all your work.

What is the firm's WACC? Show all your work.
Should the firm accept this project if it requires an initial investment of 12 million? Why or why not? Explain using the appropriate equations. show all your work.
What is the discounted payback period for this project? Based on this when would the project be acceptable? Explain.
Suppose the firms after tax cost of debt increases to 7%. Will this to affect the expansion decision? Why or why not? explain using the appropriate equations. Show all your calculations.
Show all your work. Explain all your answers using the appropriate equations (not just calculator functions). Your explanation determines your grade.