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BA620 is evaluating the following capital structure. Unlevered beta is 0.75, risk-free rate =1.5% and market risk premium=6%. Free cashflow is $500 million and EBIT
BA620 is evaluating the following capital structure. Unlevered beta is 0.75, risk-free rate =1.5% and market risk premium=6%. Free cashflow is $500 million and EBIT is $400 million. The company has 200 million shares. Tax rate is 25%. Which is the best capital structure for BA620 company? Fill in the necessary variables.
Percent of debt financing(wd) | 0% | 10% | 20% | 30% | 40% | 50% |
Percent of equity financing(ws) | 100% | 90% | 80% | 70% | 60% | 50% |
1.beta | ||||||
2.Rs | ||||||
Rd | 5% | 5.2% | 6.0 % | 6.40% | 7% | 8% |
3.Rd(1-t) | ||||||
4.W ACC | ||||||
5.V op | ||||||
6.Debt | ||||||
7. Equity | ||||||
8.Number of shares | ||||||
9. Share price | ||||||
10. Net Income | ||||||
11. EPS |
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