There are three approaches in the Income Method (WACC, APV and Equity methods). For each prompt below, which approach would you recommend?

a.The Company has a target capital structure of 60% debt and 40% equity and it expects to make capital adjustments to stay at that level going forward.

b. The Company just took out $5M in debt and plans on paying it off installments over the next five years. There are no plans to acquire additional debt in the future.

c. In your valuation, you want to use cash flows that would be after paying interest on the debt.

d. You want to value the interest tax shield separately.