KarPark runs a mix of construction and engineering business. The company is considering an upfront investment of Rs$.160$ crore into construction business. This project will generate cash flow of Rs$.15$ crore every year forever with the first cash flow to be received two years from now. The risk$-$free interest rate is $5\%$ and the expected rate of return on the market is $10\%.$ Assume the CAPM is true. What is the required rate of return on park's equity? What is the required rate of returns on park's debt?What is Karpark weighted average cost of capital before the project is taken? Ignore taxes. What is the appropriate discount rate to use for the project? What is the net present value of the project? Based on the data given above, which of the two businesses, construction and engineering, is riskier? Support your answer with an appropriate analysis of the given data.Company Weight of Equity Weight of debt Beta of equity Beta of Debt

KarPark $50\%50\%0\mathrm{.}90\mathrm{.}2$

Construction Companies $40\%60\%0\mathrm{.}80\mathrm{.}3$

Engineering Companies $60\%40\%1\mathrm{.}10\mathrm{.}2$

What is the appropriate discount rate to use for the project?

What is the net present value of the project