Question
Harris, Inc., has equity with a market value of $23.8 million and debt with a market value of $11.9 million. Treasury bills that mature in
| Harris, Inc., has equity with a market value of $23.8 million and debt with a market value of $11.9 million. Treasury bills that mature in one year yield 4 percent per year and the expected return on the market portfolio is 10 percent. The beta of the companys equity is 1.23. The company pays no taxes. |
| a. | What is the company's debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| b. | What is the companys weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| c. | What is the cost of capital for an otherwise identical all-equity company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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Credit Spreads Beginners Guide To Low Risk Secure Easy To Manage Consistent Profits For Long Term Wealth Creation
Authors: Casey Boon
1st Edition
1974677419, 978-1974677412
