General Products has an asset beta of 1.4, and a debt to equity ratio of 0.7. Their tax rate is 0.24. If the risk free rate is 0.02, and the expected return on the S&P500 is 0.13, what is the cost of levered equity for General Products?
Levered Beta = Unlevered Beta x (1 + ((1 – Tax Rate) x (Debt/Equity))) |
levered beta = 1.4*(1+((1-0.24)*(0.7))) |
levered beta = 2.14 |
As per CAPM |
expected return = risk-free rate + beta * (expected return on the market - risk-free rate) |
Expected return% = 2 + 2.14 * (13 - 2) |
Expected return% = 25.54 |
General Products has an asset beta of 1.4, and a debt to equity ratio of 0.7....
General Products has an asset beta of 1.4, and a debt to equity ratio of 0.7. Their tax rate is 0.24. If the risk free rate is 0.02, and the expected return on the S&P500 is 0.13, what is the cost of levered equity for General Products?
General Products has an asset beta of 1.4, and a debt to equity ratio of 0.6. Their tax rate is 0.31. If the risk free rate is 0.03, and the expected return on the S&P500 is 0.11, what is the cost of levered equity for General Products?
General Products has an asset beta of 1.0, and a debt to equity ratio of 1.3. Their tax rate is 0.40. If the risk free rate is 0.05, and the expected return on the S&P500 is 0.18, what is the cost of levered equity for General Products?
General Products has an asset beta of 1.0, and a debt to equity ratio of 1.3. Their tax rate is 0.40. If the risk free rate is 0.05, and the expected return on the S&P500 is 0.18, what is the cost of levered equity for General Products?
General Products has an asset beta of 0.9, and a debt to equity ratio of 1.9. Their tax rate is 0.27. If the risk free rate is 0.05, and the expected return on the S&P500 is 0.09, what is the cost of levered equity for General Products?
Question 3 1 pts General Products has an asset beta of 1.1, and a debt to equity ratio of 1.2. Their tax rate is 0.34. If the risk free rate is 0.04, and the expected return on the S&P500 is 0.17, what is the cost of levered equity for General Products?
Peter Inc. has an asset beta of 1.3, and a debt to equity ratio of 1.7. Their tax rate is 0.33. If the risk free rate is 0.07, and the expected return on the S&P500 is 0.16, what is the cost of levered equity for Peter Inc.?
Question: The asset beta of a levered firm is 1.4. The beta of debt is 0.5. If the debt to value ratio is 0.3, what is the equity beta? Formula: Equity beta = Asset beta + Debt to equity ratio * (Asset beta - Beta of Debt) *the debt to equity ratio is NOT given. I must find the debt to equity ratio first to complete the answer. Only the debt to value ratio is provided.
A company has a beta of 1.4, pre-tax cost of debt of 5% and an effective corporate tax rate of 20%. The weight of debt in its capital structure is 60% and the rest is equity. The current risk-free rate is 2% and the expected market return is 7.5%. What is this company's weighted average cost of capital? Answer in percent, rounded to one decimal place.
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