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Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta=1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75% (Round to two decimals) Use 99 if the answer is indeterminate

Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta=1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75% (Round to two decimals) Use 99 if the answer is indeterminate

Essentials Of Investments
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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Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta=1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75 % (Round to two decimals) Use 99 if the answer is indeterminate
Transcribed Image Text:Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta=1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75 % (Round to two decimals) Use 99 if the answer is indeterminate
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