Question
A Private equity (PE) firm is considering buying a publicly traded manufacturing company. What the discount rate should the PE company apply in estimating the
A Private equity (PE) firm is considering buying a publicly traded manufacturing company. What the discount rate should the PE company apply in estimating the value of the company if the following data is available:
- Company beta = 1.25
- Marginal tax rate = 23.00%
- Current 1-year Treasury rate = 0.95%
- Current 10-year Treasury rate = 1.85%
- Market risk premium = 6.5%
- the company does not have any debt
Enter your answer in decimals, e.g. 4.45% as 0.0445
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Accounting Theory Contemporary Accounting Issues
Authors: Thomas G. Evans
1st Edition
0324107846, 9780324107845
