Question 2 Your company has expected free cash flows of $65M per year in perpetuity starting next year. Your company's asset cost of capital is 10%. The corporate tax rate is 35%. Ignore other frictions. For (a), assume that your firm is an all-equity firm. ) What is the unlevered value of your firm? For the remaining questions, assume that your firm is a levered firm. Your firm maintains a target leverage ratio, , of 40%. The debt cost of capital is 75%. b) What is your company's equity cost of capital? Use the pretax WACC (weighted average cost of capital) equation to solve for E[TE: c) Calculate your company's WACC with taxes. Round the number to four decimal places d) Using WACC, calculate the levered value of your company. e) What is the NPV of debt financing? Question 2 Your company has expected free cash flows of $65M per year in perpetuity starting next year. Your company's asset cost of capital is 10%. The corporate tax rate is 35%. Ignore other frictions. For (a), assume that your firm is an all-equity firm. ) What is the unlevered value of your firm? For the remaining questions, assume that your firm is a levered firm. Your firm maintains a target leverage ratio, , of 40%. The debt cost of capital is 75%. b) What is your company's equity cost of capital? Use the pretax WACC (weighted average cost of capital) equation to solve for E[TE: c) Calculate your company's WACC with taxes. Round the number to four decimal places d) Using WACC, calculate the levered value of your company. e) What is the NPV of debt financing