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Hey! Just need help finding the levered beta on this??? looking for the excel formula for it! Thanks :) 4/16/2010 Chapter 15. Ch 15-12 Build
Hey! Just need help finding the levered beta on this??? looking for the excel formula for it! Thanks :)
4/16/2010 Chapter 15. Ch 15-12 Build a Model Reacher Technology has consulted with investment bankers and determined the interest rate it would pay for different capital structures, as shown below. Data for the risk-free rate, the market risk premium, an estimate of Reacher's unlevered beta, and the tax rate are also shown below. Based on this information w hat is the firm's optimal capital structure and what is the weighted average cost of capital at the optimal structure? Input Data Risk-free rate Market risk premium Unlevered beta Tax rate Percent Financed 4.5% 5.5% 0.8 with Debt Before-tax (w) Cost Debt (rd) 40,0% 0% 10% 20% 30% 40% 50% 60% 70% 6.0%) 6.1% 7,0% 8.0%) 10.0%) 12.5% 15.5% 18.0%) Fill in formulas in the yellow cells to find the optimum capital structure Debt/Value Equity/Value Debt/Equity A-T Cost ofLevered Cost of Ratio (wa) Ratio (w) Ratio (Wd/wDeb (rd) Equity WACC 0% 10% 20% 30% 40% 50% 60% 70% 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.00 0.11 0.25 0.43 0.67 1.00 1.50 2.33 WACC at optimum debt ratio Optimum debt ratio 1 of 1Step by Step Solution
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