Expected free cash flow= .7*222+.3*140 =197.4
From this 83 million has to be given back due to Zero coupon bond expiry
Total cashflow to equity=197.4-83 =114.4
Equity cost of capital is the required return that the firm will create in 1 year = (114.4-100)/100 =14.4%
Question 6 5 pts A company has one-year, zero-coupon debt outstanding with face value $83 million....
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