Question $8$: $10$ marks Keiper, Inc., is considering a new three$-$year expansion project that requires an initial fixed asset investment of $\backslash (\backslash$$ $2\mathrm{.}7\backslash )$ million. The fixed asset will be depreciated straight$-$line to zero over its three$-$year tax life, after which time it will be worthless. The project is estimated to generate $\backslash (\backslash$$ $2,080,000\backslash )$ in annual sales, with costs of $\backslash (\backslash$$ $775,000\backslash ).$ The tax rate is $35$ percent. What is the NPV for this project if the required return is $\backslash (12\backslash \%\backslash )?$ Question $9$: $\backslash (5\backslash$times $2=10\backslash )$ marks Provide brief answers to the following questions: a$)$ Differentiate between assets, liabilities and capital and arrange them as the accounting equation. b$)$ What is agency problem? c$)$ If a firm's cost of equity is $\backslash (10\backslash \%\backslash ),$ cost of debt is $\backslash (5\backslash \%\backslash )$ and it pays taxes at the rate of $\backslash (34\backslash \%\backslash ),$ what is the firm's WACC assuming it uses $\backslash (40\backslash \%\backslash )$ equity and $\backslash (60\backslash \%\backslash )$ debt in its capital structure? d$)$ How does market segmentation theory differ from pure expectations theory? e$)$ If there is a $\backslash (30\backslash \%\backslash )$ chance that a stock will provide a $\backslash (5\backslash \%\backslash )$ return and a $\backslash (70\backslash \%\backslash )$ chance that it will provide $90,$ return, what is the standard deviation of its returns? END OF EXAMINATION