Question
GenuinelCare is a company that offers residential health care services. The company has $200 million in interest-bearing debt (in book value and market value terms).
GenuinelCare is a company that offers residential health care services. The company has $200 million in interest-bearing debt (in book value and market value terms). The firm has 35 million shares trading at $ 10 a share, and the unlevered beta of firms in the health care business is 0.9. The firm has a current rating of B, with a default spread of 0.05 over the risk free rate. The risk free rate is 0.045, the market risk premium is 0.06 and the corporate tax rate is 40%.
Estimate the debt to capital ratio for the firm? Estimate the debt to equity ratio for the firm? What is the beta levered for the firm? Estimate the cost of debt for the firm? Estimate the after tax cost of debt for the firm? Estimate the cost of equity for the firm? Estimate the cost of capital for the firm?
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