2). The financial manager of HW is considering a project. It will produce just one cash flow in year 1, but with some uncertainty. It has 10% of chance to generate $8 million in year 1,60% of chance to generate $3 million, and 30% to generate $0. The project requires $2.5 million investment today. The project has the average risk level of the company. You also have some information on the company. HW's cost of debt is 4.5%. Beta of debt is 0.2 . The average estimate for the beta of HW's industry is 1.5 with standard error of 0.3 . The ratio of debt to overall company value is 20%. Assume market return based on historical data is 9%, risk free rate is 0.5% and corporate tax rate is 21%. (a). What's cost of equity for company HW by using CAPM model? (keep four decimals) [12 points] (b). What's the after-tax WACC of HW? (keep four decimals) [18 points] (c). What's NPV of the project based on your answer in (a) and (b)? (keep four decimals) [24 points] (d). Should the financial manager take the project and why? [4 points]