1. Capital Structure and Valuation. The value of this firm is defined as:
the present value of FCF discounted at the WACC
the present value of FCF discounted at the unlevered cost of equity
the present value of tax shield discounted at the WACC
None of the above
2. Cost of Capital. Note the following additional data: D0 = $1, ROE = 24%, P0 = $15, beta = 1.50, equity ratio = 60%. Calculate the firm's cost of common equity.
14.04%
15.07%
22.74%
None of the above