5) Consider Rotopellar Corp., a firm with 100 million in assets. It makes blades for wind turbines. It is considering an expansion of $2 million to increase its capacity. The expansion should create a perpetual net cash inflow of $390,000 per year after costs. The company is currently at its target debt ratio of 25% and has an 8% cost of debt. The firm is considering issuing equity. The float costs of equity would be 6% of net proceeds. The CFO believes the required rate of return on the firm's equity is 15% but the flotation costs will raise it to 21%. It does not appear to be a good project at 21%. Do(es) logical error(s) exist in the CFO's argument? If so, what? What would the project's APV be if the firm used equity? Show your work. 5) Consider Rotopellar Corp., a firm with 100 million in assets. It makes blades for wind turbines. It is considering an expansion of $2 million to increase its capacity. The expansion should create a perpetual net cash inflow of $390,000 per year after costs. The company is currently at its target debt ratio of 25% and has an 8% cost of debt. The firm is considering issuing equity. The float costs of equity would be 6% of net proceeds. The CFO believes the required rate of return on the firm's equity is 15% but the flotation costs will raise it to 21%. It does not appear to be a good project at 21%. Do(es) logical error(s) exist in the CFO's argument? If so, what? What would the project's APV be if the firm used equity? Show your work