Quetsion1 The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpet's common stock currently sells for $23.00 per share; its last dividend was $2.00, and it will pay a $2.14 dividend at the end of the current year. It has $4 million outstanding debt with a 10% interest rate. The company can finance any additional financing at the current cost level. The company has 40% debt in the capital structure and is interested to keep it like this. The risk-free rate is 6%. Carpet is examining a project that will have an initial cost today of $10 million. There is significa ncertainty surrounding the first-year cash flows which create three possible cash-flow scenarios in Year 1. a. 40% probability that the cash flow after 1 year will be $15.25 million. b. 60% probability that the cash flow after 1 year will be $10.5 million. Conditioned on first-year performance outcome of scenario a, the second-year cash flow is likely to be 10 million (30% probability) or 6 million (50% probability), or 5.5 million (20% probability). If the first-year performance outcome of scenario b, the second-year cash flow is likely to be 6.5 million (30% probability) or 3.2 million (50% probability), or -1.5 million (20% probability). Should the project be undertaken under NPV? Is the investment very risky - Explain