1. A media company has a current capital structure of 80% debt and 20% common equity and its beta is 1.60, and its tax rate is 35%. However, the CFO wants to move to a capital structure with 40% debt and 60% equity to reduce debt. The risk-free rate is 5.0% and the market risk premium is 6.0%. By how much would the capital structure shift change the firm's cost of equity?
a) –5.78%
b) –6.36%
c) –6.99%
d) –7.69%
2. What are the four steps in a feasibility study and describe each one?
3. In a recent high-profile court case from the past 4 years, what are 2 factors of the trial that could prevent the defendant from receiving a fair trial?