1.) A project requires an initial investment of $40 million. It generates cash flows of $25 million in one year and $27 million in two years. The projects required return is 8%. What is the projects profitability index?

2.) WACKO Ltd. has $30 million in debt, equity of $55 million, a before-tax cost of debt of 8 percent, a cost of equity of 9 percent, and a tax rate of 25 percent. The firm's weighted average cost of capital (WACC) is