You are on your way to an important budget meeting. In the elevator, you review the project valuation analysis you had your summer associate prepare for one of the projects to be discussed: Looking over the spreadsheet, you realize that while all of the cash flow estimates are correct, your associate used the flow-to-equity valuation method and discounted the cash flows using the company's equity cost of capital of 11 %. However, the project's incremental leverage is very different from the company's historical debt-equity ratio of 0.20: For this project, the company will instead borrow $ 80 million upfront and repay $ 20 million in year 2, $ 20 million in year 3, and $ 40 million in year 4. Thus, the project's equity