You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows: Years Cash Flow 0 – 100 1 - 10 + 15 On...

You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows:

On the basis of the behavior of the firm’s stock, you believe that the beta of the firm is 1.42. Assume that the rate of return available on risk-free investments is 6% and that the expected rate of return on the market portfolio is 14%.

a.
What is the project IRR?
(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

IRR: ____%

b.
What is the cost of capital for the project?
(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Cost of Capital_____%