You have conducted an analysis of BigCo and have found that the firm is made up of two different divisions: Satellites RUs (a satellite launching service) and a bank. Projects A to G are all related to satellite launching technology. You have also examined the industry of each division and have found the following:

a. What is the appropriate discount rate for projects A to G? Describe your assumptions.
b. What will be the impact on the shareholder value of BigCo if the firm used 7 percent, the overall WACC, in the valuation of the satellite launching projects (A toG)?

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Table 1 Annual cash flows (all amounts in $millions) Year 0 Year 1 Year 2 1,000 Year 3 1,200 Year 42,500 Year53,000 ProjectA Project B Project C ProjectD Project E Project F Project G 5,000 4,800 1,000 6,000 3,000 4,000 1,000 500 2,000 1,500 1,000 300 500 200 8,000 2,000 2,000 8,000 2,000 2,500 5,000 2,000 3,000 5,000 1,000 3,000 10,000 3,000 2,000 1,000 1,000 3,000 3,000 1,500 1,200 300