Suppose it's January 2021 and you would like to estimate the unlevered cost of capital (ru) for Atlas Corp. The current share price of Atlas is $10 and there are 20 million shares outstanding. You have estimated Atlas' equity beta as 0.85 ,and its cost of debt (ro) as 3.75%. The risk-free rate is 2.5% and the market risk premium is 7%. In addtion, the table below shows the current balance sheet of the firm. Assume that all cash and short-term investments are excess cash. Based on the information provided, what is the best estimate the unlevered cost of capital for Atlas Corp? Select one. Assets Cash & Short-Term Investments Accounts Receivable Inventory Other Current Assets Total Current Assets Balance Sheet (in $-millions) 2020 Liabilities $10.00 Accounts Payable $30.00 Short-Term Debt $15.00 Current Maturities of Long-Term Debt $4.00 Other Current Liabilities $59.00 Total Current Liabilities 2020 $10.00 $5.00 $15.00 $9.00 $39.00 Property, Plant & Equipment $150.00 Long-Term Debt Less Accumulated Depreciation ($40.00) Capital Lease Obligations Net Property, Plant & Equipment $110.00 Total Debt $50.00 $0.00 $50.00 Goodwill & Intangible Assets Other Long-Term Assets $18.00 Deferred Taxes $23.00 Other Long-Term Liabilities ($12.00) $22.00 Total Liabilities $99.00 Shareholders' Equity $111.00 $210.00 Total Liabilities and Shareholders' Equity $210.00 Total Assets O 1.7.37% O 2.8.45% O 3.7.51% O 4.5.73% O 5.6.23% Suppose it's January 2021 and you would like to estimate the unlevered cost of capital (ru) for Atlas Corp. The current share price of Atlas is $10 and there are 20 million shares outstanding. You have estimated Atlas' equity beta as 0.85 ,and its cost of debt (ro) as 3.75%. The risk-free rate is 2.5% and the market risk premium is 7%. In addtion, the table below shows the current balance sheet of the firm. Assume that all cash and short-term investments are excess cash. Based on the information provided, what is the best estimate the unlevered cost of capital for Atlas Corp? Select one. Assets Cash & Short-Term Investments Accounts Receivable Inventory Other Current Assets Total Current Assets Balance Sheet (in $-millions) 2020 Liabilities $10.00 Accounts Payable $30.00 Short-Term Debt $15.00 Current Maturities of Long-Term Debt $4.00 Other Current Liabilities $59.00 Total Current Liabilities 2020 $10.00 $5.00 $15.00 $9.00 $39.00 Property, Plant & Equipment $150.00 Long-Term Debt Less Accumulated Depreciation ($40.00) Capital Lease Obligations Net Property, Plant & Equipment $110.00 Total Debt $50.00 $0.00 $50.00 Goodwill & Intangible Assets Other Long-Term Assets $18.00 Deferred Taxes $23.00 Other Long-Term Liabilities ($12.00) $22.00 Total Liabilities $99.00 Shareholders' Equity $111.00 $210.00 Total Liabilities and Shareholders' Equity $210.00 Total Assets O 1.7.37% O 2.8.45% O 3.7.51% O 4.5.73% O 5.6.23%
