QUESTION 7 Firm A is a well-established medium size firm. It has $600 million of...
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Finance
QUESTION 7 Firm A is a well-established medium size firm. It has $600 million of market value of equity and $300 million of debt. Treasury bills that mature in one year yield 4 percent per year, and the expected return on the market portfolio is 10 percent. The beta of Firm A's equity is 1.5. Solve the following questions (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Assuming no tax rate, solve the following two questions: Q1 (4pts) What is the firm's WACC? Q2 (4 pts) What is Firm A's unlevered cost of equity capital? (You should use MM's proposition II to solve the question)
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