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Thunder Inc. is a private chemical industrial firm. You are trying to determine its market value. You decide to use Harbor Industries, a public firm,
Thunder Inc. is a private chemical industrial firm. You are trying to determine its market value. You decide to use Harbor Industries, a public firm, as a comparable firm to guide your valuation. Harbor industries has a debttoequity ratio of It has an equity beta of and debt beta of You decide to use the unlevered beta of the comparison firm as the estimation of the unlevered beta for Thunder Inc. Suppose, Thunder Inc. has a debttoequity ratio of and can borrow at rate. It also has a debt beta of The riskfree rate is the market premium is and the corporate tax rate is What is the WACC of Thunder Inc.?
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