Answer 15.7, 15.6 is included for reference

15.6 University Health System has three divisions: Real Estate, with an 8 percent cost of capital; Health Services, with a 10 percent cost of capital; and Managed Care, with a 12 percent cost of capital. The system's risk adjustment procedures call for adding 3 percentage points to adjust for high risk and subtracting 2 percentage points for low risk. Construct a diagram such as the one in Exhibit 15.8 that illustrates the range of project costs of capital for the system. 15.7 Refer to the table developed in Problem 15.6 for University Health System. Assume the Managed Care Division is evaluating a project with the net cash flows and probabilities shown in the table below. Assume the Managed Care Division has judged the project to have lower-than-average risk. Is the project financially attractive? Year Prob. 0.3 Prob. 0.4 Prob. 0.3 0 ($100,000) ($100,000) ($100,000) 20,000 20,000 20,000 20,000 30,000 30,000 30,000 30,000 40,000 40,000 40,000 40,000 4