Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Determine: 1- the WACC based on company's current capitalization and comps values: Current Capitalization: Cash on hand 10,000 PP&E 30,000 total debt 20,000 total equity

Determine:

1- the WACC based on company's current capitalization and comps values:

Current Capitalization:
Cash on hand

10,000

PP&E 30,000
total debt 20,000
total equity 60,000
valuations assumptions:
Tax Rate 30%
perpetual growth rate 2%
EBITDA Exit multiple 10.0x
risk free rate 55
equity risk premium 4%
interest rate 6%
COMPARABLE COMPANY BETA
COMPANY LEVERED BETA DEBT EQUITY DEBT/EQUITY TAX RATE UNLEVERED BETA
A 1.27 550 1100 0.5 35% 0.96
b 1.31 500 900 0.56 30% 0.94
C 1.15 450 1200 0.38 29% 0.91
D 1.11 600 1000 0.6 33% 0.79
E 1.38 450 1400 0.32 30% 1.13
MEDIAN 1.27 0.9432

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Belverd E Needles, Marian Powers

10th Edition

0547193289, 9780547193281

More Books

Students also viewed these Finance questions