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Iota Enterprises expected to have free cash flow in the coming year of $8 million,...

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Finance

Iota Enterprises expected to have free cash flow in the coming year of $8 million, and this free cash flow is expected to grow at a rate of 3% per year thereafter. Iota has an equity cost of capital of 13%, a debt cost of capital of 7%, and it is in the 35% corporate tax bracket.

  1. (2 points) If Iota currently maintains a debt-to-equity ratio of 1, then its pre-tax WACC is closest to:

  1. (2 points) If Iota currently maintains a debt-to-equity ratio of 1, then the value of Iota as an all-equity firm would be closest to:

  1. (2 points) If Iota currently maintains a debt-to-equity ratio of 1, then Iotas after-tax WACC is closest to:

  1. (2 points) If Iota currently maintains a debt-to-equity ratio of 1, then the value of Iota as a levered firm is closest to:

  1. (2 points) If Iota currently maintains a debt-to-equity ratio of 1, then the value of Iotas interest tax shield is closest to:

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