Question 2 Not yet answered Marked out of 3.00 p Flag question Tawhiri Equipment Company's adjusted total assets are valued as $125 Million. The total debt value of the company is $25 million. Net income recorded in the previous year is $5 million. Interest rate earned on fixed income securities is 8%. Due to high risk nature of the company, the figure 1.5 is used to adjust for risk. The risk free interest rate is 3% per year. With Anglo-Saxon method, calculate the equity value of this company. Select one: O a. $ 155.2 mil O b. $ 128.9 mil O c. $ 116.7 mil O d. $ 105.4 mil e. $ 95 mil Question 6 Not yet answered Marked out of 3.00 P Flag question As can be illustrated by SML graph, what is the disadvantage of using only the WACC as the sole discount rate for capital budgeting purpose in a company? Select one: a. Such a practice relies too much on the constant growth model to estimate the cost of equity. O b. There is no advantage since the projects being evaluated using the WACC are typically equal in risk to the firm's existing assets. c. The company tends to incorrectly accept risky projects and incorrectly reject less risky projects. d. The weights are based on market values of debt and equity. e. The company will have difficulties reaching its target capital structure. Question 2 Not yet answered Marked out of 3.00 p Flag question Tawhiri Equipment Company's adjusted total assets are valued as $125 Million. The total debt value of the company is $25 million. Net income recorded in the previous year is $5 million. Interest rate earned on fixed income securities is 8%. Due to high risk nature of the company, the figure 1.5 is used to adjust for risk. The risk free interest rate is 3% per year. With Anglo-Saxon method, calculate the equity value of this company. Select one: O a. $ 155.2 mil O b. $ 128.9 mil O c. $ 116.7 mil O d. $ 105.4 mil e. $ 95 mil Question 6 Not yet answered Marked out of 3.00 P Flag question As can be illustrated by SML graph, what is the disadvantage of using only the WACC as the sole discount rate for capital budgeting purpose in a company? Select one: a. Such a practice relies too much on the constant growth model to estimate the cost of equity. O b. There is no advantage since the projects being evaluated using the WACC are typically equal in risk to the firm's existing assets. c. The company tends to incorrectly accept risky projects and incorrectly reject less risky projects. d. The weights are based on market values of debt and equity. e. The company will have difficulties reaching its target capital structure