Given AES's pyramid ownership structure, does the 12% discount rate (applied to dividends at the parent company level) properly reflect the overall group leverage? In particular, does the 12% discount rate result in the projects' hurdle rates (at the subsidiary level) that are likely too high or too low? Explain briefly. Hint: Keep in mind that the parent company own equity stake in the subsidiaries, and therefore the return on asset for the parent is the return on equity for the subsidiaries. The return on asset of the subsidiaries can then be calculated by mixing the return on equity and the return on debt together, just as in WACC. This process then trickles down as some subsidiaries own other subsidiaries and so on down the chain