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Can you try to answer in 30 minutes?Thank you!! You have been asked to evaluate the quality of investments at Megapolis Inc., a firm that

Can you try to answer in 30 minutes?Thank you!!
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You have been asked to evaluate the quality of investments at Megapolis Inc., a firm that operates in two businesses - cement and steel. You have been provided the following information on the businesses: Market value of Unlevered beta of assets (in millions) business Cement 4 000 1.60 Steel 4 000 0.75 Total 8 000 The firm has 200 million shares, trading at $30 a share and faces a marginal tax rate of 25%. The company's bonds have an A rating and a default spread (over risk free rate) of 3%. The risk-free rate is 2% and the equity risk premium is 8%. Estimate: Market value of equity (E) and market value of debt (D) Unlevered beta for the total firm (can be found as a weighted average) and then levered beta for the firm c. Cost of equity and debt Cost of capital (WACC) b. d 7 A ELE 2

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