In a two$-$factor APT model, easyJet has a factor beta of $1\mathrm{.}15$ on the first factor portfolio,which is highly correlated with the change in GDP$,$ and a factor beta of$0\mathrm{.}3$ on the secondfactor portfolio, which is highly correlated with interest rate changes. If the risk$-$free rateis $5\%$ per year, the first factor portfolio has a risk premium of $2\%$ per year, and the secondhas a risk premium of $0\mathrm{.}5\%$ per year

Compute the cost of capital for the BA Cityflyer project $($from Exercise $5\mathrm{.}3)$ that uses easyJet as the appropriate comparison firm. Assume no taxes and no need forleverage adjustments.

$($b$)$What is the present value of an expected $5$ million BA Cityflyer cash flow one yearfrom now, assuming that easyJet is the appropriate comparison? Assume no taxes and no need for leverage adjustments.

c$)$What are the cash flow beta and the certainty equivalent for the BA Cityflyer project