1. B plc is a hot air balloon manufacturer whose equity:debt ratio is 5:2. The company is considering a waterbed-manufacturing project. B plc will finance the project to maintain its existing capital structure S plc is a waterbed-manufacturing company. It has an equity beta of 1.59 and a Ve:Vd ratio of 2:1. The yield on B plc's debt, which is assumed to be risk free, is 11%. B plc's equity beta is 1.10. The average return on the stock market is 16%. J The corporation tax rate is 30% Required: Calculate a suitable cost of capital to apply to the project. 2. A project requires an initial investment of $20,000 and will generate annual cash flows as follows: YearCash flow $ 4,000 (2,000) 6,000 7,600 10,000 4 The firm's financing rate (for negative cash flows) is 9%. and its j reinvestment rate for positive cash flows is 6% Required: What is the MIRR