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please answer irm has 26 Shares terms). trading at $ 13 a share, and the unlevered beta of comparable firms in the health care business
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irm has 26 Shares terms). trading at $ 13 a share, and the unlevered beta of comparable firms in the health care business is 0.75. The firm has a current rating of B, with a default spread of 0.05 over the risk-free rate. The risk-free rate is 0.045, the equity risk premium is 0.07 and the corporate tax rate is 40%. What is the levered beta for the firm? 1.016 Estimate the cost of equity for the firm. 0.11612 Estimate the before-tax cost of debt for the firm. 0.095 Estimate the after-tax cost of debt for the firm. 0.057 What is the market value weight of debt? 0.3717 What is the market value weight of equity? 0.6283 Estimate the cost of capital for the firm. irm has 26 Shares terms). trading at $ 13 a share, and the unlevered beta of comparable firms in the health care business is 0.75. The firm has a current rating of B, with a default spread of 0.05 over the risk-free rate. The risk-free rate is 0.045, the equity risk premium is 0.07 and the corporate tax rate is 40%. What is the levered beta for the firm? 1.016 Estimate the cost of equity for the firm. 0.11612 Estimate the before-tax cost of debt for the firm. 0.095 Estimate the after-tax cost of debt for the firm. 0.057 What is the market value weight of debt? 0.3717 What is the market value weight of equity? 0.6283 Estimate the cost of capital for the firmStep by Step Solution
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