Question
Solve not in excel and provide all the formulas You have been asked to evaluate the quality of investments at an some inc., a firm
Solve not in excel and provide all the formulas
You have been asked to evaluate the quality of investments at an some inc., a firm that open 2 business books and pens. You have been provided the following information of the businesses:
Market value of assets | Unlevered beta of business | |
books | 100 000 000$ | 1.30 |
pens | 100 000 000$ | 0.70 |
200 000 000$ |
A firm has 100 million shares, trading at $10 a share and faces a marginal tax rate of 31% . Company`s bonds have an A rating and a dedefault spread ( over risk free rate) of 4%. The risk rate is 6% and the equity risk premium is 9%.
1) Market value of equity and market value of debt
2) Unlevered beta for the total firm ( can be found as a weighted average) and unlevered/levered beta for the firm
3) Cost of equity and debt
4) Cost of capital ( WACC)
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