(Solution) 15.12 Reacher Technology Has Consulted With Investment Bankers And Determined The Interest Rate It Would Pay For Different Capital Structures, As | Snapessays.com


(Solution) 15.12 Reacher Technology has consulted with investment bankers and determined the interest rate it would pay for different capital structures, as


Fin-Module 6 Spreadsheet Problem. Part B Day 3. Please answer in excel. Thank you.Information:

 

Input Data

 

Risk-free rate

 

4.5%

 

Market risk premium

 

5.5%

 

Unlevered beta

 

0.8

 

0%

 

6.0%

 

Tax rate

 

40.0%

 

10%

 

6.1%

 

20%

 

7.0%

 

30%

 

8.0%

 

40%

 

10.0%

 

50%

 

12.5%

 

60%

 

15.5%

 

70%

 

18.0%

 

15.12

 

Reacher Technology has consulted with investment bankers and determined the interest rate it would

 

pay for different capital structures, as shown below. Data for the risk-free rate, the market risk premium, an

 

estimate of Reacher's unlevered beta, and the tax rate are also shown below.

 

Part B:

 

what is the

 

weighted average cost of capital at the optimal structure?

 

Percent

 

Financed with

 

Debt (w

 

d

 

)

 

Before-tax

 

Cost Debt

 

(rd)

 


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This question was answered on: May 23, 2022

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