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Please solve this question ASAP! Question 1: (1) Slavic Air is an East European airline that is growing rapidly and has its headquarter in Poland.

Please solve this question ASAP!
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Question 1: (1) Slavic Air is an East European airline that is growing rapidly and has its headquarter in Poland. The company derives its revenues in three countries and has two businesses: passenger and freight traffic. The breakdown of revenues in the most recent year is in the table below, with information about government bond rates in the three countries. Government Passenger Freight Country Currency I Bond Rate (in Revenues (in Revenues (in Euros) millions) millions) Poland Zloty (PLN) 2.25% PLN 500.00 PLN 250.00 Hungary Forint (Ft) 2.50% PLN 250.00 PLN 250.00 Germany Euros () 1.00% PLN 250.00 PLN 500.00 While value is proportional to revenues in both businesses, the passenger traffic business is riskier, with an unlevered beta of 1.25, than the freight traffic business, with an unlevered beta of 0.75. Slavic has a market value of equity of 1 billion, debt outstanding of 500 million and faces a marginal tax rate of 25%. a. Estimate the levered beta for Slavic Air. (20 marks) b. Estimate the cost of equity in Euros for Slavic Air. (The mature market equity risk premium is 6% and Germany is a mature market with a Aaa rating. You can assume that equity is 1.5 times more volatile than government bonds in both Poland and Hungary.) (20 marks) c. Estimate the after-tax cost of debt (in euros) for Slavic Air. You don't have a bond rating for Slavic Air but you have computed a synthetic rating of Baa3 for the company, with a default spread of 2%. (20 marks)

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