Which statement is FALSE? (In all answer choices we assume, that everything else is constant)

Select one:

a) The free cash flow will increase assuming that the tax rate decreases.

b) The free cash flow will increase assuming that the current assets increase more than current liabilities.

c) The free cash flow will increase assuming that the depreciation is lower than capital expenditure.

d) Free cash flow will increase if earnings before interest and taxes increases.

16. Holding everything else constant, decrease in beta---------

Select one:

a) suggests, that the return of the investment is more exposed to market changes.

b) suggests that the unsystematic risk is higher.

c) will lead to increasing required returns.

d) will lead to decreasing required returns.

e) suggests, that the return of the investment is less exposed to market changes.

The dividend gain is 10%, the tax rate is 20%. The effective cost of equity is: (Note: Please explain with formula.)

Select one:

a) 8%

b) 12%

c) 10%

d) 18%