Question
The average unlevered beta of publicly traded Sodium Chlorate businesses is 0.94. Assume zero debt beta. The target capital structure that is appropriate for Collinsville
The average unlevered beta of publicly traded Sodium Chlorate businesses is 0.94. Assume zero debt beta. The target capital structure that is appropriate for Collinsville plant is 35% debt and 65% equity. Assume a risk-free rate of 9.5% and market risk premium of 7.5%. The firm could issue debt for this investment at a cost of 11.25%. Corporate tax rate is 48%.
The NPV of the Collinsville Plant is (in $ thousands):
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The Wealthtech Book The FinTech Handbook For Investors Entrepreneurs And Finance Visionaries
Authors: Susanne Chishti, Thomas Puschmann
1st Edition
1119362156, 978-1119362159
