You are working as a financial consultant for Kansas Tech Company, a (hypothetical) publicly traded firm. Dorothy Manu, the CEO of the company, has been frustrated with the traditional cost of capital calculations typically introduced in conventional finance textbook for several reasons. Ms. Manu turned to a journal that is most popular among corporate finance practitioners called Journal of Applied Corporate Finance. It is a highly regarded journal that summarises/digests the latest development and debates in corporate finance to audiences. In a rather recent issue, she has found an article that offers a new way to calculate the cost of capital for a company called EACC . Ms. Manu is extremely excited about this and has asked you to do the following for her:

Q1. Provide brief answers/descriptions on the new technique presented in the assigned article.

Points to cover are:

- Overall description of the technique

- Justifications of the technique

- The benefits of the technique (e.g. major advantages over traditional techniques)

- Discussion of the conditions/situations where this technique is valid (including limitations)