Ahemba Limited is a large conglomerate and is considering three potential investment projects for which it is assumed they have sufficient funds. The relative risk of each project has been assessed and the beta for each project is given below: Aeroplane engine = 2.4 Computer games retailer = 1.2 Electric utility = 0.7 The companys financial structure is presently 70% equity and 30% debt. The cost of debt is 10% and cost of equity is calculated using the Capital Asset Pricing Model (CAPM) where the industry average asset beta is 1.2; the risk-free rate is 6% and the market risk premium is 8%. The corporate tax rate is 25%. The financial manager has provided the following estimates of after-tax cash flow for the three projects which are assumed to have equal lives of 5 years Year Aeroplane Engine (in GHm) Computer Games Retailer (in GHm) Electric Utility (in GHm) 0 (3,700,000) (1,300,000) (8,000,000) 1 1,800,000 800,000 2,300,000 2 1,600,000 560,000 2,800,000 3 1,250,000 420,000 2,200,000 4 860,000 250,000 2,100,000 5 610,000 100,000 1,700,000 (i) Using an appropriate cost of capital for each project, evaluate the viability of the three projects using NPV. (ii) As part of your evaluation, explain the reasons behind your choice of the cost of capital for each project.