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Solve not in excel and provide all the formulas You have been asked to evaluate the quality of investments at an some inc a firm that open 2 business books and pens You have been provided the

Solve not in excel and provide all the formulas

You have been asked to evaluate the quality of investments at an some inc., a firm that open 2 business – books and pens. You have been provided the following information of the businesses:

 

Market value of assets

Unlevered beta of business

books

100 000 000$

1.30

pens

100 000 000$

0.70

 

200 000 000$

 

A firm has 100 million shares, trading at $10 a share and faces a marginal tax rate of 31% . Company`s bonds have an A rating and a dedefault spread ( over risk free rate) of 4%. The risk rate is 6% and the equity risk premium is 9%.

1) Market value of equity and market value of debt

2) Unlevered beta for the total firm ( can be found as a weighted average) and unlevered/levered beta for the firm

3) Cost of equity and debt

4) Cost of capital ( WACC)

Aug 16 2020 View more View Less

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