Question: Please show all work. These cash flows include all acquisition effects. Comfy's cost of equity is 12%, its beta is 1.0, and its cost of

Please show all work. These cash flows include all acquisition effects. Comfy's Please show all work.

These cash flows include all acquisition effects. Comfy's cost of equity is 12%, its beta is 1.0, and its cost of debt is 8%. The risk-free rate is 5%. a. What discount rate should be used to discount the estimated cash flow? (Hint: Use Comfy's cost of equity to determine the market risk premium.) b. What is the dollar value of Mega to Comfy's shareholders? ANSWER a

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