1. Now assume that Lube Oil has a return on equity of 5 percent and a cost of equity of 10 percent. As a stockholder in Lube Oil, would you want the firm to change its dividend policy? Why or why not?
2. Tech Products reported a net loss of $80 million for the latest financial year. In addition, the firm reported a net capital expenditure of $70 million, and a change in noncash working capital of $10 million. Finally, the firm had $10 million in debt at the start of the year that it paid off during the year Estimate the FCFE.