1. The Hamada equation allows the firm to:
A. Solve for a company’s total risk
B.Adjust the beta of a pure- play firm for its use of debit financing
C. Estimate it’s asset beta
D.Both a and C are correct
2. In order to find the cost of equity using the firm’s cost of that the rule of thumb is to:
A. Multiply Kd by one plus the tax rate
B. Multiply Kd By one minus the tax rate
C. Add 3% to 6% to Kd
D. Multiply Kd By the firms beta