Upfront investment New working capital needed immediately Project life Revenue at year 1 Cost at year 1 Revenue growth per year Cost growth per year Tax rate Depreciation Salvage value of investment Project A $100,000.00 $ 50,000.00 5 years $ 50,000.00 $ 20,000.00 5% 3% 15% Straight-line $ Project B $ 250,000.00 $ 80,000.00 8 years $ 65,000.00 $ 22,000.00 6% 2% 15% Straight-line $ Market Risk Premium Spartan Inc Beta Risk-free Rate 6% 0.9 2% Spartan Inc is evaluating 2 potential projects. Relevant information is presented in the Figure. Here is a brief summary: Spartan Inc is an all-equity firm. Its stock beta is 0.9. Right now the market risk premium is 6%, risk-free rate is 2%. Project A needs upfront investment of $100,000, new working capital of $50,000. First year revenue $50,000, first year cash cost $20,000; Revenue is to grow by 5% each year, and cost to grow by 3% each year. Project A has 5 years life. Project B needs upfront investment of $250,000, new working capital of $80,000. First year revenue $65,000, first year cash cost $22,000; Revenue is to grow by 6% each year, and cost to grow by 2% each year. Project B has 8 years life. Both projects are to recoup working capital at the end of their life. Both use straight-line depreciation. Both capital investments have zero salvage value. Tax rate is at 15%. Please answer the following questions in each of the 6 boxes, and clearly state the formulas: What is the firm's cost of equity? What is project A's cash flow from assets in year 0 and year 5? What is project B's cash flow from assets in year 0 and year 8? What is project A's NPV? What is project B's NPV? Which project should we choose