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Suppose the risk-free rate of interest is 5 percent, the market risk premium is 6 percent, and the corporate tax rate is 35%. The venture's equity has a bota of 1.25 and its debt has a beta of 0.25. a) Compute the cost of equity and the value of a perpetuity of the expected cash flows to equity b) Compute the cost of debt and the value of a perpetuity of the expected cash flows to dobt. c) Assuming that the value of total assets is equal to the value of debt plus the value of equity, compute the total value of the venture. d) Compute the venture's weighted average cost of capital (WACC). e) Using total capital cash flows (cash flow to all investors) and the asset cost of capital, ostimate firm value based on the perpotuity of expected earnings. How does it compare to the value you computed by adding up the debt and equity values? Suppose the risk-free rate of interest is 5 percent, the market risk premium is 6 percent, and the corporate tax rate is 35%. The venture's equity has a bota of 1.25 and its debt has a beta of 0.25. a) Compute the cost of equity and the value of a perpetuity of the expected cash flows to equity b) Compute the cost of debt and the value of a perpetuity of the expected cash flows to dobt. c) Assuming that the value of total assets is equal to the value of debt plus the value of equity, compute the total value of the venture. d) Compute the venture's weighted average cost of capital (WACC). e) Using total capital cash flows (cash flow to all investors) and the asset cost of capital, ostimate firm value based on the perpotuity of expected earnings. How does it compare to the value you computed by adding up the debt and equity values

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