Question
You have run a regression of Google returns against returns on the S&P500 and the equation was as follows: ReturnsGoogle = 0.0002 + 0.85 (ReturnsS&P500)
You have run a regression of Google returns against returns on the S&P500 and the equation was as follows:
ReturnsGoogle = 0.0002 + 0.85 (ReturnsS&P500) R2 = 0.65, the standard error for the beta estimate is 0.4
You also note that the average unlevered beta for comparable firms is 1.3, Google's debt-to-equity ratio 30% ,T-bond rate is 0.055 and the equity risk premium is 0.085 and Google AA rate bond default spread is 0.025. ( Tax rate = 40%)
Please write your answers in decimals.
What is the levered beta for Google?
Answer for part 1 What is Google's after tax cost of debt?Answer for part 2 What is Google's cost of equity?
Answer for part 3 What is the WACC?
Answer for part 4 What is the firm specific risk?
Answer for part 5 What is the market risk?
--------------- Please Solve As soon as Solve quickly I get you thumbs up directly Thank's Abdul-Rahim Taysir
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