Question 21 of 23 Banana Electric is a public company with the following details: Risk free rate 2.096 MRP 5.0% 1.0 Observed Beta Price per share $10.00 Shares outstanding 1,000.0 Debt (market value) 200.0 Cash 1,500.0 Cost of debt 2.096 Tax rate 0.0% Question: Calculate the weighted average cost of capital. 06.5696 6.9096 O 7.7596 8.0596 8.7496 Question 20 of 23 An analyst is building a DCF on January 1, 2017 and has calculated unlevered free cash flows as follows: 2017 2018 2019 2020 2021 2022 Unlevered free cash flows 100.0 105.0 110.3 115.8 121.6 127.6 % Growth 5.0% 5.0% 5.0% 5.096 5.0% WACC 10.0% Perpetuity growth rate 3.0% Net debt $700 ($1,050 in gross debt less $350 in cash) After checking her work, she realizes that she did not reflect the following information in her calculations: Deferred tax liabilities (DTLS) are $120 million on the balance sheet as of the valuation date and have arisen because the company uses straight-line depreciation under GAAP but accelerated depreciation for tax purposes. The DTts are expected to grow by $20 million in each year through 2022, at which point it is assumed that they will stop growing and stay on the books indefinitely (the DTL will never reverse). Question: Which of the statements below is most accurate? Use whole numbers (ie. 1 year exactly equals 1 period when calculating returns and discounting), The analyst should adjust UFCF up by $20 in each year through 2022. Terminal value should be recalculated to 1.877.5 million. Net debt shouldn't be modified The analyst should adjust UFCF down by $20 in each year through 2022. Terminal value and net debt do not need to be modified The analyst should adjust UFCE down by $20 in each year through 2022. Terminal value (undiscounted) should be recalculated to 2.172 2 milion Net debt shouldn't be modified The analyst should adjust UFCF up by $20 in each year through 2022. Terminal value and net debt do not need to be modified The analyst should adjust UFCF down by $20 ayat ug 2022. Terminal value should be recalculated to 201722 million. Net debt should be recalculate to the addition of the present value of 120 million in