1. AFEX Inc. has a cost of equity of 12% and no debt. The company is now borrowing money to repurchase its own shares. Assume perfect capital markets (no taxes).

Assume that the company borrows to the point where its debt to equity ratio is 1.3 instead. Given that level of debt, its debt is now riskier and will require an interest rate of 10%. What is the new cost of equity? 2. Churchgate is expected to pay an annual dividend of $2.01 per share in one year, which is then expected to grow by 10% per year. The required rate of return is 14%.

What is the stock's value? 3. Simfix's free cash flow during the current year is $130 million, which is expected to grow at a constant rate of 6% in the future. The weighted average cost of capital is 11%.

What is the firm's total corporate value (in $ million)? 4. Zenith Inc. forecasts that it will have the free cash flows shown below. The free cash flows are expected to grow by 4% per year after year 3.

Year 1 FCF ($million) : -20

Year 2 FCF ($million): 48

Year 3 FCF ($million): 54

The weighted average cost of capital is 13%. The firm has $46 million of debt and 10 million shares outstanding.

What is Zenith's terminal value (in $ million)?