Faraday Cars Inc. is a public corporation specializing in the production of electric cars. Currently, Faraday is evaluating a project to produce a next-generation electric car. The management of Faraday knows that Maxwell Cars Inc., a newcomer to the industry, is also planning to introduce a next-generation electric car. In the recent past, Faraday has applied a cost of capital of 15% in valuing electric car projects. However, the CEO objects to using the same cost of capital for the new electric car project, saying, This time, we are facing additional risk. If Maxwells new electric car turns out to be technologically superior to ours, then our cash flow will be $100 million lower than our projections. To account for the additional risk in cash flows, we should use a higher discount rate than we normally use. Do you agree with the CEO? Please provide the rationale behind your answer.