1. Data:
2. Estimate cost of capital using the following data:
   1. Beta 2.1
   2. Current 10 year US Treasury 3.8%
   3. Expected market return 12%
   4. Tax rate 35%
   5. Current yield on debt 7.3%
   6. Market value of equity - $1, 400,000
   7. Market value of debt - $600,000

Question: Discuss financial statement analysis focusing on the benefits and challenges of ratio analysis and common-size financial statements