GenuinelCare is a company that offers residential health care services. The company has $200 million...
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Accounting
GenuinelCare is a company that offers residential health care services. The company has $200 million in interest-bearing debt (in book value and market value terms). The firm has 25 million shares trading at $ 25 a share, and the unlevered beta of firms in the health care business is 0.9. The firm has a current rating of B, with a default spread of 0.05 over the risk free rate. The risk free rate is 0.045, the market risk premium is 0.06 and the corporate tax rate is 40%.
Estimate the debt to capital ratio for the firm.
Answer for part 1
Estimate the debt to equity ratio for the firm.
Answer for part 2
What is the beta levered for the firm?
Answer for part 3
Estimate the cost of debt for the firm.Answer for part 4
Estimate the after tax cost of debt for the firm.
Answer for part 5
Estimate the cost of equity for the firm.Answer for part 6
Estimate the cost of capital for the firm.
Answer for part 7
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