equity. The required returns on the company's debt and equity are 8% and 10%, respectively. The company's marginal tax rate is 30%. The WACC is? Show your calculations. b. Suppose an analyst estimates equity value by discounting free cash flow to equity (FCFE) at the weighted average cost of capital (WACC) in the FCFE model and estimates firm and equity value by discounting free cash flow to the firm (FCFF) at the required return on equity in the FCFF model. The analyst would most likely: overestimate equity value with the FCFE model and underestimate firm value and equity value with the FCFF model. Explain why? c. Identify methods used to estimate the required rate of return of stocks (Equity risk premium) O What are the challenges in estimating those d. Identify the methods used to estimate the cost of borrowing using bonds. O Explain the idea of credit rating of companies and how investors can use it to identify the cost of borrowing. Pick a company from this list and talk about it briefly (https://wikirating.org/list-of-corporations-by-credit-rating | o Why is the tax rate included in the cost of borrowing? O What are the challenges in the calculation? equity. The required returns on the company's debt and equity are 8% and 10%, respectively. The company's marginal tax rate is 30%. The WACC is? Show your calculations. b. Suppose an analyst estimates equity value by discounting free cash flow to equity (FCFE) at the weighted average cost of capital (WACC) in the FCFE model and estimates firm and equity value by discounting free cash flow to the firm (FCFF) at the required return on equity in the FCFF model. The analyst would most likely: overestimate equity value with the FCFE model and underestimate firm value and equity value with the FCFF model. Explain why? c. Identify methods used to estimate the required rate of return of stocks (Equity risk premium) O What are the challenges in estimating those d. Identify the methods used to estimate the cost of borrowing using bonds. O Explain the idea of credit rating of companies and how investors can use it to identify the cost of borrowing. Pick a company from this list and talk about it briefly (https://wikirating.org/list-of-corporations-by-credit-rating | o Why is the tax rate included in the cost of borrowing? O What are the challenges in the calculation