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5) A firm currently has a debt to equity ratio of 2/3. Its cost of equity is currently 14%, and its cost of debt
5) A firm currently has a debt to equity ratio of 2/3. Its cost of equity is currently 14%, and its cost of debt is 5.6%, and its tax rate is 35%. If the company maintains a constant debt to leverage ratio, find the cost of its unlevered assets. A) 5.6% B) 9.856% C) 10,64% D) 14% 6) You are trying to value a firm that has reported an EBIT of $1M in its most recent year. Further, you see that the firm has $1M in excess cash, and $3M in debt. What is the value of the firm's equity if comparable firms have an enterprise value (EV)/EBIT of 11? A) $7M B) $9M C) $11M D) $12M
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