Jane is working on a valuation deal to acquire a private company, DLT Inc.. She carefully selected three comparable companies and pulled the data for comparables, as shown in the table below.

Jane is working on a valuation deal to acquire a private company, DLT Inc.. She carellly selected three comparable companies and pulled the data for comparables, as shown in the table below. Additional information about the target company: DTL plans to keep a target capital structure of 20% debt nancing, D/V = 20%. The average interest coverage ratio over past 3 years is 15. Additional market data and information: The 3-month Treasury bill yield is 1%; The 10year Treasury note yield is 3%. The market risk premium is estimated to be 6%. The corporate tax rate is 21%. Comparable Company COMP] COMP2 COMP3 Target Capital Structure Yes NO NO DN 40% 10% 30% Credit Rating B AA BB Equity Beta 2.5 1.2 2 Tax Rate 21% 21% 21% - Identify and apply the appropriate formula to unlever beta for all three comparables. - Use the MEDIAN unlevered beta as a proxy for the target company, DLT. - Calculate DLT's unlevered cost of capital. - Identify and apply the appropriate formula to relever beta and apply the CAPM model to estimate DLT's cost of equity. - Dene investment grade bond. Which comparable company's bond is considered investment grade? Tip: Here is a formula to calculate 2 = (D/V) E 1 (D l V) There are multiples routes to get to D/E. You may come up with your way to calculate D/E