Calculate i) the present value of the equity and ii) present value of the firm using the relevant cash flows and appropriate discount rates. Current free cash flow to equity (FCFE) is $15million and current free cash flow to firm (FCFF) is $25million. The cash flows (FCFE and FCFF) do not grow over time and discount rate is 10%. The risk premium is 5% and return on risk free bills is 4%. This firm has covariance of 0.032 and variance of 0.015. The firms tax rate is 10%, cost of debt is 11%, and it is financed with 50% debt and 50% equity.