Problem 1: Suppose K Corporation's projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 11%, what is the value of its operations? Is it 2,000,000 or 2,100, 000?
Problem 2: Provide a brief overview of capital structure effects. Please be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows.