2. Austin Power Co. is setting up special purpose company for its wind power project. Total investment is $100 million among which $80 million is borrowed at 7% interest rate and remaining $20 million financed by Austin Power Co. as equity ownership. Debt is perpetuity and cost of debt is equal to interest rate. Tax rate is 35%, and cost of equity is 9.94%. Annual free cash flow will be $8,000,000 forever. a. What is the value of the project and the value of equity, that are derived from WACC with book value of debt and book value of equity? Assume the debt is perpetuity and its market value is always equal to its book value. b. Apply the iteration as in Table 5-4 in the textbook, and find equilibrium WACC, value of the project and equity value