The company Next has 2 million shares outstanding with a market price of 30 NOK per share and a equity beta of 1.5. The equity`s book value is 40 million NOK. The company has 70 million nok long term debt. The debt beta is 0. Risk free interest i 3%. The markets risk premium is 7%. The company pays 30% income tax.

a) What is the market value of the company equity . What does it mean when the debt beta is equal to 0.

b) What is the total capital cost and the equity cost.

c) What would the companys equity cost be if it was financed 100% with its own equity( no debt)

d) What would the value of the company be if it was 100% financed with it own equity (no debt)

e) Explain the difference between the three different cost of capital you have calculated in b) and c).