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
Problem 1PS
Related questions
Question
S corporation has outstanding shares of 100 million shares. The company equity beta is 1.15. The interest rate on debt is \( 12.3 \% \). The weight of equity and debt is 0.75 and 0.25 respectively. The company wants to maintain its debt-to-market value ratio forever. The yield on 30-year government bond yield is \( 5.65 \% \). The estimated historical market premium is \( 9 \% \). The company is taxed at marginal rate of \( 35 \% \). The current
Calculate the value of equity per share of the company.
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