Problem 1: (20points) A project will produce an expected FCF of $100 million a year in perpetuity starting next year. To value it, we have identified a comparison firm. The equity beta of the comparison firm is 1.4, and the comparison firm has been maintaining a D/E ratio 1. The project's debt capacity is such that it will keep a constant D/E=0.75. The risk-free rate is 5%, and the market risk premium is 10%. The tax rate is 20%. a) (10 points) Use the WACC method to calculate the value of the project. Assume that both the comparison firm and the project have risk-free debt and risk-free tax shields