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You are trying to evaluate a private firm s potential as a good investment opportunity. Your mentor at the investment bank you interned during the

You are trying to evaluate a private firms potential as a good investment opportunity. Your mentor at the investment bank you interned during the summer told you to collect information on comparable firms, which will help you find the WACC of the private firm. The private firm has ND/E ratio of 2. The risk free rate is 2%. Market risk premium is 5%. Cost of debt for the private firm is assumed is 6%. The tax rate is 50%.
The following table lists the information you have gathered:
Firm Beta Equity Equity (Million) Debt (Million) Cash (Million)
A 1.320116
B 1.11582
C 0.91063
D 0.8572
Q1. What is the net debt for firm A?
Q3. What is the average asset beta you should use combining all the comparable firms?
Select the best answer from the following:
0.40
0.69
0.73
0.85
Q5. What is the cost of equity for the private firm?
Input the cost of equity for the private firm. use the result from problem 3______%(keep two decimal points)

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