RE = rf + B(E(TM) - rf) = rf + B. E(MRP) 0.01 +1.2 0.065 = 0.088 Find the weights: E 21,000 $63 D+ E 21,000 $63+ 500 $1,168 We = Wd = 1 W = 0.3062 WACC=we RE + wa = 0.6938 0.088 +0.3062 = 0.07229 . 4+ decimals . Submit RD(1 t) . 0.6938 Attempt 2/10 for 7 pts. Part 2 The firm is considering expanding by building a new superstore. The risks associated with the superstore are comparable to the risks of the firm's current operations. The superstore will require an initial investment of $12.3 million and is expected to produce cash inflows of $1.3 million annually over its 10-year life. The initial investment will be depreciated on a straight line basis over the life of the project. At the end of the 10 years, the firm expects to sell the superstore for $6.7 million. What is the NPV of superstore project? Should the firm accept or reject the project? 0.05648- (1 -0.35)