412 Comprehensive 1Wacc Computation Du behalf of your rm, you are evaluating a privately held takeover target. The table below contains. cost of capital metrics for Mo comparable publicly traded firms that are in re same general business and are similar in size compared to the acquisition target. You decide to equally weight all the comp data to estimate the correct discount rate to use in valuing the target. The target 1will be financed with 20% debt with a pretax cost of debt equal to 4%, and the debt beta is assumed to equal ll. Assume that all of the rms in your analysis are in the 35% tax bracket and that all of the firms have a policy to leave their debt ratio constant. Answer the following questions regarding the correct cost of capital to use in valuing the target. For all parts of this problem, assume a riskfree rate of 3% and a market risk premium of 6%. Equity [lhelatl'Etluit};I Assumed Com Home Beta: Caplulizatlon baht Betas Comp #1 1-5!! 15m D211 Comp #2 2.111 shame Mt! \ 1. 1What is the estimated rm or asset (unlevered equity] beta for the target rm based on the comp data? 2. 1What is the estimated levered cost of equity for the target based on the comp data and the target's debtf'value ratio of 20%