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could you help me soleve the finance management problem You are trying to determine the cost of capital for NewAirline that expects to maintain a
could you help me soleve the finance management problem
You are trying to determine the cost of capital for NewAirline that expects to maintain a leverage ratio D+E) of about to face a tax rate of 35%. to estimate the cost of capital you obtain the equity Bs of three comparable a The table below provides the equity B and the leverage of airline You are given that: Tax rate is 35%, Risk-free rate ratios these and Market Premium CEM-RF] 5%. Equity B Leverage Ratio Airline Debt/(Debt Equity) Name 42 American 1.42 .37 1.55 United Delta 1.30 .53 Please use the information from the table to compute the following: a. What are the asset B's e, the estimated Bs if there is no debt for the three airlines in the table? b. What is the cost of capital for each of the airlinesStep by Step Solution
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