1. Techinnovate Corp is considering Investing in a groundbreaking project called Project Quantum Leap . The project involves developing cutting-edge quantum computing technology. The initial investment is $5 million, and it is expected to generate cash flows of $2 million per year for the next five years. The company's cost of capital is 10% (i). Calculate the Net Present Value (NPV), Internal Rate of Return (RR) and Profitability Index (PI) for Project Quantum Leap and whether this is a good project for the company (ii). What are the advantages and disadvantages of using the profitability index as an evaluation criteria?

2. Genesis Corporation has been in business for 10 years and went public 5 years ago. A friend of yours is interested in buying the stock and, as they know you have learned how to calculate stocks and bonds in your finance class, they have come to you for help in understanding stock prices and what can influence them.

(i). Assuming a risk-free rate of 4%, a market return of 11%, and a stock's beta of 1.2, what is the estimated stock price of Genesis according to the CAPM?

(ii). There are two types of risks (systematic and unsystematic) that relate to unexpected returns that in Turn will influence the price of an asset. Provide a brief explanation of each type, including identifying which one can be best managed through diversification.