4. 1.35 Determine the WACC, MARR, and estimated ROR for the following situation at Himalayan Air, Inc., which owns and operates oxygen bars across the United States and Europe. The management plans a second major expansion of outlets with a hoped-for return of 20%

above cost of capital the first year of full operation. The first was very successful with an excess revenue of $7 million on a $20 million investment during the first year, leading to an ROR of 35%. Being more conservative due to market competition, the return on the new expansion is estimated at 80% of the previously observed ROR. This expansion will be funded using a 50-50 debt-equity mix. The equity funds currently return 6% per year and the debt financing will cost 9.7% per year. Is the expansion ROR expected to exceed the MARR?