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Consider a company having $100 Million common stocks. The price and the beta of each stock are respectively equal to $20 and 0.7. The market
Consider a company having $100 Million common stocks. The price and the beta of each stock are respectively equal to $20 and 0.7. The market value of its debt is $500 Million and considered as risk free. The risk-free rate is equal to 4% and the market expected return is 11%.
a)What is the value of the common stocks?
b)Evaluate the expected return of the common stocks.
c)Evaluate the cost of capital.
d)What is the beta of the company?
e)What is the value of the company?
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