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Homework answers / question archive / Explanation:Question 1Risk FreeMarket premiumBetaBeta'Market premium3
Explanation:Question 1Risk FreeMarket premiumBetaBeta'Market premium3.00%6 00%%0.93.0543% Risk Free rate8400% CAPM cost of Equity#2D12.38IPO138.7D1/PO0.017159337DCF Cost of Equity7.017159337Bond ratepremiumCost of Equity4%%Calculate weightsShort term borrowings600.7Current portion of longterm debt97.7Long term Borrowing3625.8Market Capital equityTotal CapitalTotal debt1324.21842022744.2Weights0.19010.8099Debt Interest Rate4%Tax Rate27.50%After Tax Cost of debt2.98.4% Cost of equityDebt TermEquity TermWADC0.55146.802977.35432