Consider a project with free cash flows in one year of $50,000 in a weak economy or $120,000 in a strong economy. The probability of the economy being weak is 30% and the probability of the economy being strong is 70%. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%. Compute the NPV of this project -$6,087 O $5,000 O $6,087 -$5,000 ABC Inc. is an unlevered firm and has a cost of capital of 11 percent. It is considering a new capital structure with 40 percent debt. The interest rate on the debt would be 5 percent. What would be the ABC's levered cost of equity? @ 15% @ 14 48% 12% 13.86% In the case of perfect markets, according to M&M Proposition II, the required return on equity is O directly affected by the firm's debt-to-equity ratio Independent of the hum's capital structure Inversely related to the firm's debt-to-equity ratio. O a result of homemade leverage