Problem 9-8 You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now After-Tax Cash Flow 0 1-10 The project's beta is 1.2. a. Assuming that rf = 6% and E(TM) 14%, what is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Net present value -60 17 b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Round your answer to 2 decimal places.) Highest beta Problem 9-9 Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market: Defensive Stock 3% 12 Market Return 4% 24 a. What are the betas of the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Aggressive stock Defensive stock Aggressive Stock -2% Aggressive stock Defensive stock b. What is the expected rate of return on each stock if the two scenarios for the market return are equally likely to be 4% or 24% ? (Do not round intermediate calculations. Round your answers to 1 decimal place.) Expected Rate of Return Beta Hurdle rate % e. What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firm's stock if the two scenarios for the market return are equally likely? Also, assume a T-Bill rate of 3%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)