She also computed the cost of equity using CAPM as follows:kE = kF + E(Risk prem

She also computed the cost of equity using CAPM as follows:kE = kF + E(Risk premium) = 0.06 + (1.25 x 0.084) = 0.165 or 16.5%where the beta is estimated for a comparable publicly traded company. Using this cost of equity she estimates the discount rate asWACC = xDebtkDebtpretax(1 t) + xcskcs = [0.20 x 0.06 x (1-0.35)]+(0.80 x 0.165) = 0.14 or 14%Based on this analysis she concludes that the value of equity is $159.9 million/0.14 = $1142 million.Assuming that the numbers used in this analysis are all correct what advice would you give your friend regarding her analysis?