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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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