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Co is plastic toy manufacturer whose debt to equity ratio is 3:2. The corporate debt. which is assumed to be risk free, has a gross

Co is plastic toy manufacturer whose debt to equity ratio is 3:2. The corporate debt.
which is assumed to be risk free, has a gross redemption vield of 12%. The beta value of
RI
company's equity is 1.3. The average return on the stock market is 18%. The corporate
tax rate is 30%.
Rpm
The company is considering acquiring a bicycle manufacturing project. B Company is a
bicycle manufacturing company with equity beta of 1.7 and equity and debt ratio 2:1. A
Co wants to maintain its existing capital structure after the implementation of new
project. What is suitable weighted average cost of capital to apply to project?
image text in transcribed
Que 2, CLO - 2) a) Co is plastic toy manufacturer whose debt to equity ratio is 3:2. The corporate debt. which is assumed to be risk free, has a gross redemption yield of 12%. The beta value of 2 company's equity is 1.3. The average return on the stock market is 18%. The corporate tax rate is 30%. The company is considering acquiring a bicycle manufacturing project. B Company is a bicycle manufacturing company with equity beta of 1.7 and equity and debt ratio 2:1. A Co wants to maintain its existing capital structure after the implementation of new project. What is suitable weighted average cost of capital to apply to project

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