East$-$Side Developers is considering the development of a four$-$year phased$-$in condo project. As

shown in the table the condo investment and development costs are expected to be $$8$ million each

year beginning in the present and extending to year $3$ as the four major condo buildings are

constructed. The condo profits $($EBIT$(1-$t$))$ are expected to be $$10$ million after taxes for $4$ years.

The investment is to be financed with $30\%$ equity and $70\%$ debt. The rate on the debt is to be $10\%.$

The risk of the project is related to future condo prices. The company, in turn, assumes that such risk

is similar to the same risk investors would assume in the stock market $({}_u=1).$ Other pertinent

information:

$R_f=0\mathrm{.}05$

$R_M=$ expected market rate $=0\mathrm{.}15$

$t=$ corporate tax rate $=0\mathrm{.}4.$

Dep $-=0$

$(1)$ What is the required rate of return on this project?

$(1.$b$)$ What is the investment expenditure $($in the present$)?$

$(1.$c$)$ What is the expected rate of return on the investment? You may calculate this rate using the

total return $($TR$)$ with the funds assumed to be reinvested at the required rate.