Question
Kristian Thalen has just joined the corporate treasury group at Electrolux of Sweden, the multinational Swedish appliance maker. Electrolux is considering making an offer for
Kristian Thalen has just joined the corporate treasury group at Electrolux of Sweden, the multinational Swedish appliance maker. Electrolux is considering making an offer for GE's appliance business, and wants to revise its weighted average cost of capital for its analysis in its home currency, the Swedish kroner (SEK). Kristian has been assigned the task. Using the following assumptions, he goes step by step through the following questions.
| Assumptions | Values | |
| Swedish kroner, government bond rate (10-year) | 4.30% | |
| Electrolux credit risk premium | 1.20% | |
| Swedish corporate tax rate | 26.00% | |
| Electrolux beta | 1.30 | |
| Swedish equity market risk premium (equity return over risk-free) | 4.00% | |
| Electrolux shares outstanding | 286,130,000 | |
| Electrolux share price | SEK 182.00 | |
| Electrolux debt outstanding (SEK) | SEK 11,532,000,000 |
What proportion of Electrolux's capital structure is equity?
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The Risk Modeling Evaluation Handbook Rethinking Financial Risk Management Methodologies In The Global Capital Markets
Authors: Greg Gregoriou, Christian Hoppe, Carsten Wehn
1st Edition
0071663703, 978-0071663700
