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The following financial statement & market value data pertains to Southwater Inc., a manufacturer of women's suits (in million USD): Table 6 Financial Statement &
The following financial statement & market value data pertains to Southwater Inc., a manufacturer of women's suits (in million USD):
Table 6
Financial Statement & Market Value Data Pertains to Southwater Inc.
1 | Total Assets | $154,287 |
2 | Interest-Bearing Debt | $33,984 |
3 | Average Pre-tax borrowing cost | 7.75% |
4 | Book Value Equity | $21,365 |
5 | Market Value Equity | $66,735 |
6 | Income Tax Rate | 39.6% |
7 | Market Equity Beta | 0.77 |
8 | Market Risk Premium | 7.45% |
9 | Risk-free Rate | 2.5% |
- Calculate the company's cost of equity capital.
- Calculate the weight on debt capital that should be used to determine Northridges weighted-average cost of capital.
- Calculate the weight on equity capital that should be used to determine Northridges weighted-average cost of capital.
- Calculate Northridges weighted-average cost of capital.
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