Your firm is planning to invest in an automated packaging plant. Harburtin Industries is an all-equity firm that specializes in this business. Suppose Harburtin's equity beta is

0.81, the risk-free rate is 4 %, and the market risk premium is 4%.

After computing the project's cost of capital you decided to look for other comparables to reduce estimation error in your cost of capital estimate. You find a second firm, Thurbinar Design, which is also engaged in a similar line of business. Thurbinar has a stock price of $20 per share, with 14 million shares outstanding. It also has $105 million in outstanding debt, with a yield on the debt of 4.8%. Thurbinar's equity beta is 1.00.

a. If your firm's project is all-equity financed, estimate its cost of capital. Round 2 decimal places b. Assume Thurbinar's debt has a beta of zero. Estimate Thurbinars unlevered beta. Use the unlevered beta and the CAPM to estimate Thurbinar's unlevered cost of capital. Thurbinar's beta is? Round 2 decimal places. Thurbinar's unlevered cost of capital is? Round 2 decimal places. c.Estimate Thurbinar's equity cost of capital using CAPM. Then assume its debt of capital equals its yield and using these results, estimate Thurbinars unlevered cost of capital. Thurbinar's equity cost of capital is?. Unlevered cost of capital? d. Explain the difference between your estimate in part (b) and part (c)v