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Complete the table under the following scenarios: Corporation Tax (Tc) is equal to 0% Corporation Tax (Tc) is equal to 30% You are given the
Complete the table under the following scenarios: Corporation Tax (Tc) is equal to 0% Corporation Tax (Tc) is equal to 30% You are given the following information: Risk-free rate (Rf) is 3% Expected return on the market (Rm) is 9% Assume Cost of debt is equal to the risk-free rate. Beta of Unlevered Equity (Ba) is 1.20 (It was calculated by comparing the returns of the company with no debt against the returns of the market index.) Corporate Tax of 0% Beta of equity (Be) 1.2 Cost of debt (Rd) WACC Cost of Equity (Re) 0.102 0.03 0.102 Value of Debt (D) 0 200 400 600 800 Value of Equity (E) 1000 800 600 400 200 2 0.03 0.15 0.102 6 0.03 0.39 0.102 Corporate Tax of 30% Beta of equity (Be) Cost of debt (Rd) WACC Cost of Equity (Re) 0.102 1.2 0.03 0.102 Value of Debt (D) 0 200 400 600 800 Value of Equity (E) 1000 800 600 400 200 1.76 0.03 0.1356 0.0898 4.56 0.03 0.3036 0.0775
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