Required:$($a$)$ Determine the net present values $($NPVs$)$ of the two projects $***$ at the companys current cost of capital and identify the project the company should opt for.$($b$)$ Re$-$compute$***$ the NPV of the S$-$Type $1$ project at $16\%$ as suggested by the finance director. Comparing the NPVs of the two projects, identify the project the company should opt for.$($c$)$ Comment on the $***$ views of the chief executive and the finance director.$($d$)$ Re$-$compute the NPV of the S$-$Type $1$ project at the rate you deem suitable and comparing the $***$ NPVs of the two projects, identify the project the company should opt for.Class Test $2-($Asset Beta$)$

Mag plc is a UK based ${?}^{******}$ company that specializes in chemicals. The company has just developed two new products T$-$Type $2$ and S$-$Type $1.$ The characteristics of T$-$Type $2$ mirror the characteristics of the chemicals the company currently produces. S$-$Type $1$ on the other hand is different. Its characteristics are $***$ very similar to the chemicals manufactured by a company called Fin plc$.$

Management only has finance facilities to invest in one of the two projects. Details in relation to the two companies and the ${?}^{******}$ two products follow. Mag is an all$-$equity company with an equity beta of $1\mathrm{.}2.$ Fin on the other hand is financed by a combination of debt and equity $($in the proportions ${?}^{******}$ of $40\%$ and $60\%,$ respectively$)$ and its debt and equity betas are $0\mathrm{.}21$ and $1\mathrm{.}36,$ respectively.

Project details:

$\backslash$table$[[,$T$-$Type $2,$S$-$Type $1],[$Project life,$5$ years,$5$ years$],[$Initial investment $(),8m,6m$