1. Consider the Ideko intrinsic valuation example seen in class. Differently from what was done in class, assume that the Ideko's market share remains at 10%. You can verify that, in that case, an expansion in 2008 and 2009 is far from being necessary, and therefore Ideko will not have abnormal capital expenditures in 2008 and 2009 (they will remain as 5 million per year), and also will not increase its borrowing in 2008 and 2009. To make its target leverage ratio consistent with this new scenario, it has to be 50% rather than 40%. Assume the cost of debt remains at 6.8% per year inspite of the leverage increase. Which of the following is closest to the IRR from KKP's perspective?

   		45.3% per year.
   		39.8% per year
   		25.8% per year.
   		22.2% per year.
   		17.7% per year
   		13.8% per year.