1. Suppose Alcindor Company is instead interested in the Elway Company, a firm in a completely unrelated (and riskier) industry. Elway Company has the same parameters as Walton Company (Question 8),...

1. Suppose Alcindor Company is instead interested in the Elway Company, a firm in a completely unrelated (and riskier) industry. Elway Company has the same parameters as Walton Company (Question 8), except Elway has a cost of equity of 15%, a cost of debt of 10%, and 20% debt. What value should Alcindor Company be willing to pay for Elway Company? 10 Kubrick Company decides to buy Hitchcock Company. Both firms have the same characteristics as Walton Company (Question 8), except Kubrick Company has a beta of 1.2, and Hitchcock Co. has a beta of 1.4. Both firms have 30% debt and a cost of debt of 8%. Because of the nature of the synergies anticipated in the acquisition, the combined firm is expected to have a beta of 1.1. a. If the risk-free rate is 6% and the equity risk premium is 5%, calculate the cost of capital for the two firms and the combined firm. b. Assuming the value drivers remain constant (and revenues are simply combined), what would be the value of the combined company?