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please answer them all MapCo Restructuring Note: Questions 2 through 6 are some of the intermediate steps required to answer this question. Please refer to

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please answer them all

MapCo Restructuring Note: Questions 2 through 6 are some of the intermediate steps required to answer this question. Please refer to the example we did in class if you have questions. You run a regression of monthly returns of Mapco, an oil- and gas-producing firm, on the S&P 500 Index and come up with the following output for the period 1991 to 1995. Intercept of the regression = 0.380%; X-coefficient of the regression =0.55; Standard error of X-coefficient =0.2; R2=55.0% There are 18.00 million shares outstanding, and the current market price is $6.00/share. The firm has $20.00million in debt outstanding. The firm has a tax rate of 40.00% percent. Find upcoming number answers from above given question: 1) What would an investor in Mapco's stock require as a return, if the Treasure bond rate is 4.00%percent? Use 5.00% as the market risk premium -Number answer: b) Assume now that Mapco has three divisions. It plans to divest itself of one of the divisions for $22.00 million in cash and acquire another for $67.00 million (it will borrow $45.00 million to complete this acquisition). The division it is divesting is in a business line where the average unlevered beta is 0.35, and the division it is acquiring is in a business line where the average unlevered beta is 0.88. What will the beta of Mapco be after this acquisition? 2) Unlevered beta of Mapco before restructuring? 3) Current firm size? 4) Unlevered beta of the remaining divisions? 5) Firm size after restructuring (i.e. after divesting a division and acquiring the new division)? 6) Total debt after restructuring (ie, after divesting one division and purchasing a new division)? 7) Unlevered beta after restructuring? 8) Levered beta after restructuring

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