1. Bruin Inc. is investing in a new project with similar risk profile as its other projects. Considering that the cost of equity is 11.7%, the cost of debt is 6.6% and the company's tax rate is 35%, what is the appropriate discount rate for the project if the debt/equity ratio is 0.5?
a. 9.1500%
b. 8.3000%
c. 9.2300%
d. 7.9950%
e. 6.7600%
2. What is the risk premium on a small cap index with an expected return of 13.6% and 25.4% volatility?
Assume the risk free rate is 4.6%
a. 4.60%
b. 11.10%
c. 9.00%
d. 13.60%
e. 18.20%