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if the levered beta when all equity financed is 0.8, then what is the levered beta at the current capital structure Exhibit A: Yield to
if the levered beta when all equity financed is 0.8, then what is the levered beta at the current capital structure
Exhibit A: Yield to maturity on debt: 8.0% Market value of debt: $102 million Number of shares of common stock: 10 million Market price per share of common stock: $31 Cost of capital if all equity-financed: 10.3% Marginal tax rate: 36%
Exhibit B:
Debt-to-Total Capital Ratio | Cost of Debt | Cost of Equity |
20% | 7.7% | 12.5% |
30% | 8.4% | 13.0% |
40% | 9.3% | 14.0% |
50% | 10.4% | 16.0% |
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