6.1. the inverse market demand curve for a duopoly market is p = 14 - q = 14 - q1 - q2, where q is the market output, and q1 and q2 are the outputs of firms 1 and 2 respectively. each firm has a constant marginal cost of 2 and a fixed cost of 4. consequently, the nash-cournot best-response curve for firm 1 is q1 = 6 - q2/2. a. create a spreadsheet with columns titled q2, br1, q, p, and profit. in the first column, list possible quantities for firm 2, q2, ranging from 0 to 12 in increments of 2. the column headed br1 shows the profit-maximizing output (best response) for firm 1 given firm 2’s output in the first column. the q column sums the values in the q2 and br1 columns. the p column lists the price that corresponds to q. the profit 1 column shows the profit of firm 1, taking account of its marginal and fixed costs. after filling in the spreadsheet, use the scatterplot option in excel to draw the best-response curve for firm 1. b. what is the monopoly output and profit for firm 1

Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). use both the capm method and the dividend growth approach to find the cost of equity.calculate the cost of new stock using the dividend growth approach.what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics.each project has a cost of $1 million. they will all be financed using the target mix of long-term debt, preferred stock, and common equity. the cost of the common equity for each project should be based on the beta estimated for the project. all equity will come from reinvested earnings.equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g