Question 17 Not yet answered Marked out of P Flag question Which of the following is true about estimating a firm's cost of equity capital? Select one: a. The cost of equity is equal to the weighted average cost of capital. b. The cost of equity depends on the total risk of the firm's equity. C. There is no way to directly observe the return required by the firm's equity investors d. We have no model that will provide reasonable estimates. e. It is relatively easy to calculate the firm's cost of debt and then back out the cost of equity. Question 18 Not yet answered Marked out of 1 P Flag questiorn The Brassy Co. has expected EBIT of $910, debt with a face and market value of $2,000 paying an 8.5% annual coupon, and an unlevered cost of capital of 12%. If the tax rate is 34%, what is the value of the Brassy's Select one: a. $5,685 b. $3,258 c. $6,325 d. $3,685 An unlevered firm has an EBIT $250,000. after-tax net income $165,000, and a cost of capital of 12%. A levered firm with the same assets and operations has $1.25 million in face value debt paying an 8% annual coupon; the debt sells for par value in the marketplace. What is the value of the levered firm? The tax rate is 34%. Select one: a. $2,625,000 b. $1,800,000 c. $1,375,000 d. $1,666,667 e. $1,250,000 Question 20 Not yet answered Marked out of 1 Flag question DogChew Products needs to replace its rawhide tanning and molding equipment. It can be used for five years and will have no salvage value. The equipment costs $930,000. The firm can lease it for $245,000 a year, or it can borrow the money to purchase the equipment at 96. The firm's tax rate is 39%. The CCA rate is 20% (Class 8) What is the after-tax lease payment? Select one: a. $106,150 b. $245,000 c. $123,350 d. $149,450 e. $95,550