Question: Please answer Question 1 a, b, c ,d .Thanks QUESTION - 1 _(15 Marks) a. What influences the Cost of Equity of a firm? Explain.

Please answer Question 1 a, b, c ,d .Thanks

QUESTION - 1 _(15 Marks) a. What influences the Cost of Equity of a firm? Explain. (3 marks) b. Explain how the Capital Asset Pricing Model provides a good estimate of the Cost of Equity. (4 marks) c. Explain the formula: Cost of Debt = Loan Interest rate (1 tax rate) (4 marks) d. Provide proof that the formula in lc. is correct in the case of a firm having an EBIT of $100,000, debt of $600,000 with 10% interest, and a tax rate of 40%. Hint: Calculate for tax payment amounts. (4 marks)

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