ABC company has unleveraged beta of 1.8, risk free rate of 4% and a market risk premium of 2%. The applicable tax rate is 30%.

The company needs to finance a new project having three different scenarios of financing:

Scenario Debt ratio Interest rate (before tax) EPS Scenario 1 0% 0% $1.5 Scenario 2 30% 15% $3.5 Scenario 3 60% 20% $3.8

1- Calculate the WACC under Scenario 1 *

4.5%

7.6%

5.4%

3.3%

None of the above

2- Calculate the price per share under Scenario 1 *

$19.7

$18.5

$20.2

$21.5

None of the above

3- Calculate Beta Leveraged under Scenario 2 *

3.24

1.82

2.84

2.34

None of the above

4- Calculate the WACC under Scenario 2 *

18.6%

10%

9.2%

8.6%

None of the above

5- Calculate the price per share under Scenario 2 *

$40.32

$25.5

$39.8

$25.6

None of the above

6- Calculate Beta Leveraged under Scenario 3 *

2.05

3.85

3.69

2.78

None of the above