has a debt/equity ratio = 2. The firm has a cost of equity of 12% and a cost of debt of 6%. Calculate the firm’s equity’s beta (β) after the target debt/equity ratio changes to 1.5. Assume that the cost of debt does not change. Ignore

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A: Equity beta = 1.2 Debt/equity ratio = 0.7 Asset beta = ?     Asset beta is systematic risk over…

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A:

Q: The market risk premium is 5%. The firm has an estimated beta of 0.9 and the current risk free rate…

A: Given Information : Market risk premium = 5%Beta = 0.9 Risk free rate = 3%

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Q: 7.77% 9.00% 10.14% 8.27%

A: As per CAPM , Cost of equity = Risk free rate +beta (Market return - Rosk free rate)

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A: according to CAPM model: expected return =rf+beta×rm-rf where, rf=risk free raterm=market return

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A: a)At date 1 ,two possible values are possible: 100*120%=120 or 100*90%=90 d=downmove=0.9 and upmove…

Q: is targeting specific debt levels in the future. Cost of de ate is 4% and the expected market risk…

A: Cost of debt = 7%Risk free rate = 4%Expected market risk premium = 6%Unlevered asset beta = 1

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