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harry up please i have exam now N&N is a software company. In the current year, the firm reported operating earnings before interest and taxes
harry up please i have exam now
N&N is a software company. In the current year, the firm reported operating earnings before interest and taxes of $400 million and these earnings are expected to grow 5 percent a year in perpetuity. The unlevered beta for other software firms is 1.10, and these firms have on average cash balances of 20 percent of firm value. If N&N has a debt ratio of 25 percent, a tax rate of 20 percent, a return on capital of 10 percent on operating assets, and a cost of debt of 8 percent before taxes. The risk-free rate is 4 percent, and market risk premium is 5.5 percent. Estimate the cost of capitalStep by Step Solution
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