Suppose all assumptions of the Capital Asset Pricing Model are true. Consider two firms A and B$,$ which invest in the same type of risky projects. The asset side of both firms is worth $$100$ million. Firm A is purely equity financed, and firm B is financed with $$60$ million risk$-$free debt and $$40$ million equity. Suppose the risky project$$s expected return is $8\%$ and the risk$-$free interest rate is $2\%.$

a$)$ What is the expected return on firm A$$s equity?

b$)$ What is the expected return on firm B$$s equity?

c$)$ What is ratio of firm A$$s equity beta to firm B$$s equity beta?

Consider a new project, which costs $$1,000$ now and yields the expected cash flow $$1,100$ next period. Assume that the new project does not change the beta of either firm.

d$)$ Should firm A$$s shareholders vote against the new project and WHY?

e$)$ Should firm B$$s shareholders vote against the new project and WHY?