1.Ridley Inc. is a small, publicly traded construction company with 50 million shares outstanding trading at $10...

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1.Ridley Inc. is a small, publicly traded construction company with 50 million shares outstanding trading at $10 a share.Ridley has:

Unlevered beta of 1.1

One bank loan with interest payments of $5 million a year for 5 years and a principal payment (FV) of $250 million

Rating of Baa, for which the default spread is 2%

Marginal tax rate of 40%

The risk-free rate is 2.5%, and the equity risk premium is 5.5%.What is the current cost of capital for Ridley? (hint: find the MV of debt using the data provided ... in order words find the PV of the debt)

Posted Date: May 19, 2024 06:14 PM

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1.Ridley Inc. is a small, publicly traded construction company with 50 million shares outstanding trading at $10...

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