1) Suppose you borrow $800000 when financing a coffee shop which is valued at $1958500. You expect to generate a cash flow of $2200000 at the end of the year. The cost of debt is 8%. What should the value of the equity be?
2) Suppose you borrow $800000 when financing a coffee shop which is valued at $1958500. You expect to generate a cash flow of $2200000 at the end of the year. The cost of debt is 8%. What is the cost of equity?