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Deleon owns assets that have a 75% chance of being worth $50M in a year and a 25% chance of being worth $30M in a
Deleon owns assets that have a 75% chance of being worth $50M in a year and a 25% chance of being worth $30M in a year. The risk-free rate is 4% and Deleon has a cost of capital of 10%. 1. If Deleon is unlevered, what is the value of equity today? 2. Suppose Deleon has debt with face value of $20M due in 1 year (the CF(D) in 1 year is $20M). What is the present value of Deleon's equity in this case? 3. What is the expected return on Deleon's equity in the unlevered case? In the levered case? 4. What is the lowest possible return on Deleon's equity in the unlevered case? In the levered case? 
- Deleon owns assets that have a 75% chance of being worth $50M in a year and a 25% chance of being worth $30M in a year. The risk-free rate is 4% and Deleon has a cost of capital of 10%. 1. If Deleon is unlevered, what is the value of equity today? 2. Suppose Deleon has debt with face value of $20M due in 1 year (the CF(D) in 1 year is $20M ). What is the present value of Deleon's equity in this case? 3. What is the expected return on Deleon's equity in the unlevered case? In the levered case? 4. What is the lowest possible return on Deleon's equity in the unlevered case? In the levered case
Deleon owns assets that have a 75% chance of being worth $50M in a year and a 25% chance of being worth $30M in a year. The risk-free rate is 4% and Deleon has a cost of capital of 10%. 1. If Deleon is unlevered, what is the value of equity today? 2. Suppose Deleon has debt with face value of $20M due in 1 year (the CF(D) in 1 year is $20M). What is the present value of Deleon's equity in this case? 3. What is the expected return on Deleon's equity in the unlevered case? In the levered case? 4. What is the lowest possible return on Deleon's equity in the unlevered case? In the levered case?
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Development Finance Innovations For Sustainable Growth
Authors: Nicholas Biekpe, Danny Cassimon, Andrew William Mullineux
1st Edition
331954165X, 978-3319541655
