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21. You gather the following information about a company and market rates: Debt $5billion Excess cash $9billion Common equity shares 500 million Book value per
21. You gather the following information about a company and market rates:
| Debt | $5billion |
| Excess cash | $9billion |
| Common equity shares | 500 million |
| Book value per share | $8.00 |
| Market price per share | $18.00 |
| Equity beta | 1.20 |
| Rf | 4% |
| Market Risk Premium | 5.5% |
- What is the Enterprise Value of the firm?
- What is the cost of equity?
- What is the unlevered cost of capital (i.e., Ru)?
- Assuming Rd is approximately 4% and the tax rate 30%, what is WACC?
- Do your results make sense? Explain.
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Contemporary Issues In Behavioral Finance
Authors: Simon Grima
1st Edition
1787698823, 978-1787698826
