Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Urgent Help, time limited Urgent Help, time limited Triangle Ltd is an ASX listed company which aims to acquire 100% shares of an unlisted firm,

image text in transcribedUrgent Help, time limitedimage text in transcribedUrgent Help, time limited

Triangle Ltd is an ASX listed company which aims to acquire 100% shares of an unlisted firm, Square Ltd, both of which operate in the same industry. Triangle capital structure comprises of 50% Debt and 50% equity with beta debt of 1.34. To finance acquiring Square, Triangle is facilitated to borrow up to 35% of funds needed with no material effect on its credit rating. a) If risk free rate is 4.3% and return on market is 9.3%, calculate Triangle cost of equity using CAPM. b) How much is Triangle WACC if tax rate is 30% and cost of debt is 7.5% ? Triangle Ltd is an ASX listed company which aims to acquire 100% shares of an unlisted firm, Square Ltd, both of which operate in the same industry. Triangle capital structure comprises of 50% Debt and 50% equity with beta debt of 1.34. To finance acquiring Square, Triangle is facilitated to borrow up to 35% of funds needed with no material effect on its credit rating. a) If risk free rate is 4.3% and return on market is 9.3%, calculate Triangle cost of equity using CAPM. b) How much is Triangle WACC if tax rate is 30% and cost of debt is 7.5% ? c) Calculate WACC of Square. d) Explain in detail what would happen if Triangle evaluated the purchase of Square using WACC of Triangle

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

Theoretical Foundations For Quantitative Finance

Authors: Luca Spadafora, Gennady P Berman

1st Edition

9813202475, 978-9813202474

More Books

Students also viewed these Finance questions