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all my answers are wrong. Only cost of debt powergen is correct. any help is appreciated. thanks PowerGen is a private company. You want to
all my answers are wrong. Only cost of debt powergen is correct. any help is appreciated. thanks
PowerGen is a private company. You want to use Contact Energy and Mercury NZ Limited as comparable companies to estimate the after-tax WACC for PowerGen. Assume a market risk premium of 4.5%, a risk-free rate of 1.1%, and a marginal corporate tax rate of 28%. You have also collected some information for all three companies (as shown below). Make use of relevant information to answer the questions below: Contact Mercury PowerGen Debt / (Debt + Equity) 0.2 0.3 0.4 Debt beta 0.15 0.2 0.3 Equity beta 0.95 0.88 Asset beta . The asset beta of Contact is 0.83 (Provide your answer as x.xx). The asset beta of Mercury is 0.73 (Provide your answer as x.xx). (Provide your The average asset beta for two comparable companies (Contact and Mercury) is 0.78 answer as x.xx). The equity beta of PowerGen is 0.99 (Provide your answer as x.xx). % (Provide your answer as x.xx. If the cost of equity is 5.05%, The cost of equity of PowerGen is 5.56 fill in 5.05). . The cost of debt of PowerGen is 2.45 % (Provide your answer as x.xx. If the cost of debt is 5.05%, fill in 5.05). The after-tax WACC of PowerGen is 4.04 % (Provide your answer as x.xx. If the WACC is 5.05%, fill in 5.05)Step by Step Solution
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