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3. Insco Inc. has the balance sheet as shown below...




3. Insco Inc. has the balance sheet as shown below. Recently the yield on bonds similar to the ones that company has had fallen to 4.5%, so that the market value of the bonds is now about $707 million The rate on company' short-term notes is equal the market's rate on these notes, which is 5%. What are the company's total invested capital and capital structure weights? What is the company's cost of equity according to CAPM, if the U.S. T-bond yield is 2.00 %, the long-term market risk premium is 6% and the company's levered beta is 1.5? What is the company's WACC? What would be the beta of a similar company that has no debt? You will need to estimate beta of bonds and short term debt using CAPM first "


Paper#8831 | Written in 18-Jul-2015

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