Rita Wexler is the CFO of Augusta Inc. Augustas common shares are thought to be\ worth $37.65 per share based on estimated future cash flows of $3.20 per share in\ perpetuity and a cost of capital of 8.5%. A new U.S. competitor has entered the market,\ so Wexler now believes Augustas cash flows per share will fall to $2.85 per share and its\ cost of capital will rise to 9.5% because of additional risk.\ For class discussion:\ 1. What is meant by future cash flows of CAD 3.20 per share in perpetuity?\ 2. What does cost of capital mean?\ REQUIRED:\ 1. What effect will these changes have on Augustas share price?\ 2. What is Augustas RRR and how does it relate to its cost of capital?