**********Question P12-2 ONLY please.**********

The media services business is cyclical and highly competitive. The board of directors has asked you, as chief financial officer, to do The following: a. Evaluate The risk of each proposed project and rank it "low," "medium," or "high." b. Comment on why you chose each ranking. P12-2 Breakeven cash inflows The One Ring Company, a leading producer of fine cast silver jewelry, is considering The purchase of new casting equipment that will allow it to expand its product line. The up-front cost of The equipment is $750,000. The company expects that The equipment will produce steady income throughout its 10-year life. a. If One Ring requires a 9% return on its investment, what minimum yearly cash inflow will be necessary for The company to go forward with this project? b. How would The minimum yearly cash inflow change if The company required a 12% return on its investment? P12-3 Breakeven cash inflows and risk Blair Gasses and Chemicals is a supplier of highly purified gases to semiconductor manufacturers. A large chip producer has asked Blair to build a new gas production facility close to an existing semiconductor plant. Once The new gas plant is in place, Blair will be The exclusive supplier for that semiconductor fabrication plant for The subsequent 5 years. Blair is considering one of two plant designs. The first is Blair's "standard" plant, which will cost $30 million to build. The second is for a "custom" plant, which will cost $40 million to build. The custom plant will allow Blair to produce The highly specialized gases that are required for an emerging semiconductor manufacturing process. Blair estimates that its client will order $10 million of product per year if The traditional plant is constructed, but if The customized design is put in place, Blair expects to sell $15 million worth of product annually to its client. Blair has enough money to build either type of plant, and, in The absence of risk differences, accepts The project with The highest NPV. The cost of capital is 12%. a. Find The NPV for each project. Are The projects acceptable? b. Find The breakeven cash inflow for each project. c. The firm has estimated The probabilities of achieving various ranges of cash in flows for The two projects as shown in The following table. What is The probability that each project will achieve at least The breakeven cash inflow found in part b