Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

UMUME Ocupal is a firm that has two divisions: One division (Palantir) sells Saas (software as a service products and the other division (Anduri sells

image text in transcribed
UMUME Ocupal is a firm that has two divisions: One division (Palantir) sells Saas (software as a service products and the other division (Anduri sells hardware to government clients. You have decided that Raytheon is a firm that is very similar to Ocupal's hardware division in terms of both risk exposure and capital structure. You have found the following information about Raytheon online: Raytheon's beta is 0.75, the risk-free rate is 3.60%, its market value of equity is $28.8 bilion, and it has $853.2 million worth of debt that currently trades with a YTM of 4.30%. The corporate tax rate is 37.5% and the market risk premium is 10.60% A) Given the above ipformation, what is the WACC of Ocupal's hardware division (Anduril? (Round this answer to 2 decimal places, but use the unrounded answer if any subsequent calculations that require ) B) If Ocupar's overall company WACC is 14.20% and the Anduril division represents 67.00% of the firm's total value, then what should be the WACC for the Palantir Saas division? (Round your answer to 2 decimal places) Check

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Sterling Bonds And Fixed Income Handbook

Authors: Mark Glowrey

1st Edition

0857190423, 978-0857190420

More Books

Students also viewed these Finance questions