Nente 6/12

Hi sir

In the question it states that ‘overall cost of capital of 11% is reasonable compensation for the risk undertaken…’
To me this would imply that 11% is the WACC as is says ‘over all’…but in bpp solution they use 11% as the Ke for caclulating the free cash flow??

In the same question, part c, I was a bit confused over why we wouldn’t discount the option escerxise price to PV, since we discount the Pa, the asst value?

I also posted this topic to the general p4 forum, apologies

Thanks