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Galaxy Inc is considering Projects Sand L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 9.75% Year 0 1 2 3 4 CFS $950 $500 $800 $0 $0 CFL $2,100 $400 $800 $800 $1,000 $63.57 $53.31 $43.16 $3.50 Kyma Inc. currently has zero debt. It is a zero growth company, and it has the data shown below. Now the company is considering using some debt, moving to the new debt/assets ratio indicated below. The money raised would be used to repurchase stock at the current price. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return on equity to rise somewhat, as indicated below. If this plan were carried out by how much would the WACC change, i.e., what is WACCold - WACCNew? New Debt/Assets 30% New Equity/Assets 70% Interest rate new rg 7.0% Orig.cost of equity.rs 10.0% New cost of equity = rs 11.0% Tax rate 40.0% 2.40% 3.42% 3.08% 2.74%