Suppose a company uses only debt and internal equity to finance its capital budget and uses CAPM to compute its cost of equity. Company estimates that its WACC is 15%. Company Debt to Equity 2.33. Before tax cost of debt is 8% and tax rate is 30%. Risk free rate is rRF = 7% and market risk premium (rm — rRF) = 12%. What is the beta of the company?

Suppose a company uses only debt and internal equity to finance its capital budget and uses CAPM to compute its cost of equity. Company estimates that its WACC is 15%. Company Debt to Equity 2.33. Before tax cost of debt is 8% and tax rate is 30%. Risk free rate is rRF = 7% and market risk premium (rm — rRF) = 12%. What is the beta of the company?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 1hM

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