Show your calculations in a spreadsheet.

Pl make sure the cell has the relevant formula that you use to get a value.

Python Inc. is an all-equity-funded company that operates in two businesses and derives all of its revenues in the United States.

	Estimated Value (in $ millions)	Unlevered Beta
Airlines	$800.00	1.25
Software	$1,200.00	1.05
Company	$2,000.00	1.15

The firm is considering borrowing $2.0 billion and expanding its Software into Mexico. The US 10-year T.bond rate is 3.5%, the Mexican government 10-year peso rate is 8%, the equity risk premium for the US is 5% and the equity risk premium for Mexico is 7.5%. Estimate the cost of equity for the company, after the expansion. (The marginal tax rate is 27%) (4 points)

The firm is considering a project that has a similar risk type as above. The project requires an investment of $300,000. The project estimated after tax cash flows are $55,000 for the next six years. Should the company accept the project? (2 points)