1. Precision Cuts has a target debt-equity ratio of .70. Its cost of equity is 15.4 percent, and its pretax cost of debt is 7.8 percent. If the tax rate is 32 percent, what is the company's WACC?
2. Year 1 2 3 4 Free cash flow $12 million $18 million $22 million $26 million is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 12%, what is current value?