O Your firm is planning to invest in an automated packaging plant Harburtin Industries is an ally from that specializes in this business Suppose Harburtin's equity botais 0.00, the tree rate is 4%, and the market is premium is 4% a. If your firm's project is egy financed, esmate cost of capital Aer computing the project's cost of capital you decided to look for other comparable to reduce station error in your cost of capital estimate you find a second firm, Tutina Design, which is also engaged in a similare of Business Thurbinar has a stock price of $10 per share with 14 milion shares outstanding It also has 5101 milion in outstanding det, with yield on the debt of 47%. Thurbinar's equity betais 1.00 b. Assume Thurbirar's Orbit has a sa beta of zero. Estimate Thubhars unlevere beta. Use the levered beta and the CAPM to estimate Thurbinar's unlevered cost of capital . Estimate Thurbina's equity cost of capital using the CAPM. Then assume its cost of capital ass yield and using these results, estimate Thurbinar's revered cost of capital d. Explain the difference between your estimate in part(b) and part(e) You decide to average your rests in part (band parties and the average the rest with your estimate from part(). What is your estimate for the cost of capital of your project? a. If your firm's project is al equity financed, estimate its cost of capital The projects cost of capital Round to two decapace) b. Assume Thurbinar's debt has a beta ofrere Estimate Thutiar's revered as the revered to the CAPM omale Thun's revered cost of Thurbinar's univered betais Round to two decades Thurbinars unlevered cost of capital (Round to wo decapaces) c. Estimate Thubirar's equity cost of capital using the CAPM. The ones del cost of capital as syild and using these results, estimate Tuitirars univered cost of capital Thurbinar's equity cost of capitals (Round to two decimal places) Thurbirar's univered cost of capital is (Round to two decimal places d. Explain the difference between your estimate in part (b) and parte (elect the best choice below) Click to select your answers Thurbinar's unlevered cost of capitalis (Round to two dom places d. Explain the difference between your estimate in part (dpartie) (Select the best choice A The answers are actually the same, any difference is due to pounding on OB. We should have gotten the same www the problem is the numbers in the problem are not com OC. In the first case, we assumed the debt had a beta ofere we assumed the cost of these while in the second case we assumed the cost of debt was the yield ont OD The answers differ because wewe using promotions rather than formules that old eactly e. You decide to average your results in part (b) and part (c), and then average this result with your estimate from part (a)What is your estimate for the cost of capital of your firm's project? The average unlevered cost of capital from part (b) and part (6) Round to modem pes) The average unlevered cost of capital from part (D) and part(a) with part (0) 5 ) Round to two decimal places)