1 2 Debt Ratio (current) 3 4 Equity Ratio (current) Cost of Debt Market Risk Premium 5 6 Equity Beta 7 Debt Beta 8 Risk Free Rate 9 Given Corporate Tax Rate 30.00% 70.00% 6.00% 5.25% 1.20% 0.29 4.50% 35.00%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1
2 Debt Ratio (current)
3 Equity Ratio (current)
4 Cost of Debt
5
Market Risk Premium
6 Equity Beta
7 Debt Beta
8 Risk Free Rate
9 Corporate Tax Rate
10
11
12 a. Cost of Equity
13 b. WACC
14 c.
15 Unlvered beta
16 Debt to Equity Ratio
17 Debt to Equity Beta
18 Cost of Equity
19 Debt to Ratio
Given
20 Equity Ratio
21 Revised WACC
22
Solution
30.00%
70.00%
6.00%
5.25%
1.20%
0.29
4.50%
35.00%
40%
Transcribed Image Text:1 2 Debt Ratio (current) 3 Equity Ratio (current) 4 Cost of Debt 5 Market Risk Premium 6 Equity Beta 7 Debt Beta 8 Risk Free Rate 9 Corporate Tax Rate 10 11 12 a. Cost of Equity 13 b. WACC 14 c. 15 Unlvered beta 16 Debt to Equity Ratio 17 Debt to Equity Beta 18 Cost of Equity 19 Debt to Ratio Given 20 Equity Ratio 21 Revised WACC 22 Solution 30.00% 70.00% 6.00% 5.25% 1.20% 0.29 4.50% 35.00% 40%
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