31 are arring at native castrame for b the l'U a (L05) Both Enbrid a major natural gas Both are all-equity f Ltd. are looking at ident Would involve a negat These cash flows projects. Both con $1 million at an 18 ne rate. Enbridge Inc. h beta of .75. The expe yielding 12 percent. Sho u llall the cost of debt? ridge Inc., a large natural gas user, and Canadian Natural Resources Ltd., igas producer, are thinking of investing in natural gas wells near Edmonton. itu financed companies. Enbridge Inc. and Canadian Natural Resources at identical projects. They've analyzed their respective investments, which negative cash flow now and positive expected cash flows in the future. es would be the same for both firms. No debt would be used to finance the , companies estimate that their project would have a net present value of en 18 percent discount rate and a -$1.1 million NPV at a 22 percent discount Inc. has a beta of 1.25, whereas Canadian Natural Resources Ltd. has a aspected risk premium on the market is 8 percent, and risk-free bonds are arcent. Should either company proceed? Should both? Explain. what circumstances would it be annropriate for a firm to una diffonant