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2. According to nanceyahooxom, IBM has a beta of 1.6 (the overall market index is the S&P 500). IBM's market value of debt is approximately

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2. According to nanceyahooxom, IBM has a beta of 1.6 (the overall market index is the S&P 500). IBM's market value of debt is approximately $ 12.08 billion and its total market value of equity is $143.48 billion. IBM's average cost of debt capital (pre-tax) is approximately 15% and its marginal income tax rate is 35%. Assume that the risk-free rate is 4.6% and the market risk premium is 5%. Required: 1) 2} 3) 4) 5} Interpret IBM's beta value. Estimate IBM's cost of equity capital. Which elements of calculation is part 2) are estimates? What effect does this have on our interpretation of the cost of equity capital computed? Estimate IBM's after-tax cost of debt capital. How might we employ a rating agency's assessment of IBM in our evaluation of IBM's cost of debt capital? Estimate IBM's weighted average cost of capital. The WACC estimate would be useful in valuing what aspect{s) of IBM

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