Perth's WACC Perth's Equity Perth's Debt Beta Beta Weighted Aerage Beta of Proportion of Expected Equity Return on Expected Return on % Financing for Perth's Equity Perth's Debt Perth 1234 1 100.00% 80.00% 17.25% 60.00% 21.00% 50.00% 24.00% 10 5698DQ 40.00% 7.20% 30.00% 28.07% 9.40% 7 30.00% 11.60% 10.00% 29.40% 13.40% 5.00% 14.24% 0% none 15.00% none 1.25 no debt 0.125 0.125 0.125 2.71 0.275 2.8833 0.825 3.055 0.93 1.115 Perth's securities

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter14: Security Structures And Determining Enterprise Values
Section: Chapter Questions
Problem 12EP
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Hi

I am stuck on how to fill our this chart for corporate finance. I need to fill in the black spaces.

The problem is:

Assume an M&M world with no taxes. The risk-free rate of return is 5% and the market risk
premium is 8%. Perth Corp. is financed with equity and debt according to the percentages
listed in the table below.

 

Perth's WACC Perth's Equity Perth's Debt
Beta
Beta
Weighted
Aerage Beta of
Proportion of Expected
Equity
Return on
Expected
Return on
%
Financing for Perth's Equity Perth's Debt
Perth
1234
1
100.00%
80.00%
17.25%
60.00%
21.00%
50.00%
24.00%
10
5698DQ
40.00%
7.20%
30.00%
28.07%
9.40%
7
30.00%
11.60%
10.00%
29.40%
13.40%
5.00%
14.24%
0% none
15.00%
none
1.25 no debt
0.125
0.125
0.125
2.71
0.275
2.8833
0.825
3.055
0.93
1.115
Perth's
securities
Transcribed Image Text:Perth's WACC Perth's Equity Perth's Debt Beta Beta Weighted Aerage Beta of Proportion of Expected Equity Return on Expected Return on % Financing for Perth's Equity Perth's Debt Perth 1234 1 100.00% 80.00% 17.25% 60.00% 21.00% 50.00% 24.00% 10 5698DQ 40.00% 7.20% 30.00% 28.07% 9.40% 7 30.00% 11.60% 10.00% 29.40% 13.40% 5.00% 14.24% 0% none 15.00% none 1.25 no debt 0.125 0.125 0.125 2.71 0.275 2.8833 0.825 3.055 0.93 1.115 Perth's securities
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