4. Cost of Capital (15 points). Upon Facebook's IPO, Societe Generale generated a DCF-based valuation of the company. The cost of capital was based on a 10-year U.S. Treasury bond rate of 2.20%, a tax rate of 40%, a cost of debt of 0.50%, a capital structure of total capital from debt of 10%, an equity market risk premium of 4.30%, and a forecast beta of 1.70. a. What would you estimate Facebook's cost of equity to be? Answer: b. What would Facebook's weighted average cost of capital be? Answer: c. Facebook shares debuted at $38 per share, then dropped to $31 in just two days. One year later the share price was at $25/share, and another year later, $62/share. And Facebook pays no dividends. Given your answers to parts a through c above how would you say the shares are doing in terms of actual versus expected returns? 4. Cost of Capital (15 points). Upon Facebook's IPO, Societe Generale generated a DCF-based valuation of the company. The cost of capital was based on a 10-year U.S. Treasury bond rate of 2.20%, a tax rate of 40%, a cost of debt of 0.50%, a capital structure of total capital from debt of 10%, an equity market risk premium of 4.30%, and a forecast beta of 1.70. a. What would you estimate Facebook's cost of equity to be? Answer: b. What would Facebook's weighted average cost of capital be? Answer: c. Facebook shares debuted at $38 per share, then dropped to $31 in just two days. One year later the share price was at $25/share, and another year later, $62/share. And Facebook pays no dividends. Given your answers to parts a through c above how would you say the shares are doing in terms of actual versus expected returns