Company XYZ is a privately-held micro-cap firm . It has three peer (comparable) firms which are publicly listed. The information about the peer firms is as follows:

Firms Beta

Peer 1 1.40 Peer 2 1.60 Peer 3 1.85 Company XYZ

Debt ($mil)

80 110 90 200

Equity ($mil)

230 290 210 320 

Q17. If marginal tax rate is 30%, what is the implied levered Beta of XYZ company? (5 Points)

Q18. Company XYZ has only one bond traded in the secondary market with YTM of 6%. What is the WACC for company XYZ? Assume that risk free rate (rf) is 3% and market return(rm) is 10%. Size premium for micro-cap firms is 4.08%. (5 Points)