Question 1. (6 marks) Firm ABC is an all-equity firm with two divisions. The first division has an asset beta of 0.6, expects to generate free cash flow of $50 million this year, and anticipates a 3% perpetual growth rate. The second division has an asset beta of 1.2, expects to generate free cash flow of $70 million this year, and anticipates a 2% perpetual growth rate. Suppose the risk-free rate is 4% and the market risk premium is 5%. Assume there are no taxes. a. Estimate the value of each division. (2 marks) b. Estimate the firm's equity beta and cost of capital. (2 marks) c. Could the firm's cost of capital be used for valuing the firm's projects? Explain. (2 mark)