Question #$1.$ What determines the value of an economic asset $($as opposed to an asset that has

value for reason of sentiment$)?$

Question #$2.$ If we know the projected cash flows from loan notes and their current market value, what approach would we take to deducing the cost of the loan notes?

Question #$3.$ Why does it seem likely that businesses have a $$target$$ gearing ratio?

Question #$4.$ What is wrong with using the cost of the specific capital used to finance a project as

the discount rate in relation to that project?

Question #$5.$ When calculating the weighted average cost of capital $($WACC$),$ should we use market

values or balance sheet values as the weights of debt and equity? Explain your response.