When calculating a company's cost of debt, which of the following approaches is least acceptable: Use the average current yields on outstanding debt of industry peers, Calculate as the average credit spread for the company's credit rating plus the risk-free rate. Use the company's interest coverage ratio to determine the appropriate credit rating, and add the credit spread based on that rating to the risk-free rate. Use the current yield on its outstanding debt. When bonds are priced close to par, use the weighted average nominal interest rates on the company's outstanding debt. What is the impact of an increase in deferred tax llabilities of $20m per year on unlevered FCFs? Adjust UFCF up by $20m in each projected year. The terminal value (undiscounted) shouldn't be modified. Net debt should be increased by the projected cumulative Tax liability. Adjust UFCF down by $20m in each projected year. The terminal value and net debt do not need to be modified. Adjust UFCF down by $20m in each projected year. The terminal value (undiscounted) should be tacreased by the projected cumulative Tax lability. Net debt shouldn't be modified. Adlust UFCF up by $20m in each projected year. The terminal value and net debt do not need to be modified. Adjust UFCF down by $20m in each projected year. The terminal value should not be changed. Net debt should be increased by the present value of DTLs. The discounted value of the Terminal Value (using the Perpetuity method) in your DCF analysis appears too low. The mistake could be: 1. You forgot to grow the last projected year's UFCF by one year before calculating the Terminal Value 2. Your estimated EV/EBITDA multiple for the Terminal Value is too low 3. Your Equity Risk Premium needs to be reduced 4. You should discount the Terminal Value over more years 5. You should subtract the risk-free rate while calculating the Cost of Equity to decrease the WACC 1 and 2 3 and 4 1 and 3 2,4 and 5 1,3 , and 5