Q$20$ Refer to the above question. Upon further consideration, the company realizes that the expected $$8$ million was the probability weighted outcome of two possibilities. a $60\%$ chanceof getting $$1120$ million perpetuity and a $40\%$ chance of getting $3\mathrm{.}20$ million perpetuity $(8=6*11\mathrm{.}20+4*3\mathrm{.}20)$ and that if the $$3\mathrm{.}20$ million perpetuity is the outcome realized, thenthe company could abandon the project at the end of year one $($after making $$3\mathrm{.}20$ million in CF$),$ and sell its assets for $$57\mathrm{.}60$ million. Calculate the NP of the project under these considerationsO $$3\mathrm{.}00$ millionO $$83\mathrm{.}01$millionO $$14\mathrm{.}46$ millionO $$3\mathrm{.}04$ millionQ $19$ A company is considering a project that costs $$80$ million in upfront costs and is expected to yield $$8$ million per year in perpetuity starting at end of year one. The WACC is $11\%$ Using static NVP analysis, Should the company go ahead with the project? Yes, because its NPV is $$727$ millionO No$,$ because its NPV is $-$ $$7\mathrm{.}27$ millionO No$,$ because the $$8$ million is only a fraction of the required $$80$ million Yes, because the project's payback period will only be $10$ yearsQ$18$ Ashland gas and Electric $($AG&E$),$ a utility company, is financed with $20\%$ debt and $80\%$ equity. Its required return on equity is $9\%$ and on debt is $6\%.$ Its tax rate of $40\%.$ The company is considering branching into energy trading business, whose risk profile is quite different from the power supply business. Its current WACC is not suitable for the newbusiness. It uses the relationship RE $=$ RA $+($RA $-$ RD$)($D$/$E$)(1-$T$)$ and applies it to a surrogate, an energy derivative "pure play" company with the following information. RE $=16\%,$RD $=9\mathrm{.}60\%,$ Debt to value weight $40\%,$ Tax rate $35\%.$ What is the RA that AG&E should issue to get the RE for its new business?O$.14\mathrm{.}07\%13\mathrm{.}14\%15\mathrm{.}10\%0814\%$O $9\mathrm{.}08\%$