Question
Beta Limited has a market value of debt of $50 million and a market value of equity of $150 million. The pre-tax cost of debt
Beta Limited has a market value of debt of $50 million and a market value of equity of $150 million. The pre-tax cost of debt is 5%, the cost of equity is 8% and the tax rate is 30%.
1.Calculate the market value of assets. Show all workings. 2.Calculate the weight of debt and the weight of equity. Show all workings. 3.Calculate the after-tax cost of debt. Show all workings. 4.Calculate the pre-tax WACC. Show all workings.
5.Calculate the after-tax WACC. Show all workings.
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Advanced Accounting
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
11th Edition
978-0132568968, 9780132568968
