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please quickly Time left 1:08:27 You are trying to estimate the cost of capital for La Coste, an upscale specialty retailer. The firm is in

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Time left 1:08:27 You are trying to estimate the cost of capital for La Coste, an upscale specialty retailer. The firm is in only one business, specialty retailing; comparable firms have an average published beta of 1.1, an average debt ratio of 30% and an average tax rate of 40%. The firm has provided you with the following information: The regression beta is 0.65 with a standard error of 0.5. The firm's bonds are rated A, and the default spread for A rated bond is 0.01. The company plans to maintain its current debt ratio of 20%. The Treasury bond rate is 0.042 and the equity risk premium is 0.084. The tax rate for La Coste is 40%. What is the average unlevered beta for the comparable firms? Estimate La Coste's beta based upon the comparable firms (i.e. Bottom up beta) What is La Coste's before tax cost of debt? What is La Coste's after tax cost of debt? Use beta calculated in part two to calculate La Coste's cost of equity? Time left 1:08:08 What is La Coste's before tax cost of debt? What is La Coste's after tax cost of debt? Use beta calculated in part two to calculate La Coste's cost of equity? What is the WACC? Next page

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