1-Grokster Investment analysts have determined the market rate of return to be 6.7%. In evaluating investments over a 20 year time horizon, they use the 20 year T-Bond rate as the risk-free rate which is currently 2.3%. In order to evaluate investments, calculate the Market Risk Premium (MRP).

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2-Webster Global Services has debt at an after-tax rate of 3.2% and equity with a required return of 9.7%, given a Debt/Equity ratio of 1.3, calculate the Weighted Average Cost of Capital. There is no preferred stock.

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3-Webster Global Partners (WGP) is evaluating an investment in MiCasa, SA., a distributor of home appliances. As with any venture capitalist, they seek to sell out after 5 years. WGP estimates a free cash flow multiple of 8.7. Free cash flow in year 5 is expected to be $103 million. MiCasa, S.A. is expected to be sold at its terminal value. Calculate the terminal value using the multiple method.

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4-Webster Global Services has a Debt-to-Equity Ratio of 0.2. What is the percentage of capital that is equity?