Question: Help Please! PROJECT #1: Equity Instruments 1. You have been asked to estimate the cost of equity for Hadley Holdings, a firm with operations in

Help Please!

PROJECT #1: Equity Instruments 1. You have been asked to estimate the cost of equity for Hadley Holdings, a firm with operations in three different businesses retailing, hotels, and travel. You have collected I information on the firm's operations and of comparable firms in each of the businesses. Comparable Firms Revenues Unlevered Beta Firm ValuefSales Retailing $400 Million 0.85 2. 0 $400 Million 1.15 3.0 $800 Million 1.35 1.25 a. Estimate the bottom-up unlevered beta for Hadley Holdings. (20 points) b. Hadley Holdings has no market-traded debt. The firm does, however, have $ 1.2 billion in book debt and an interest expense of $ 60 million. lfthe debt has an average maturity of 5 years, and the fair market rate for debt for the firm is T%, estimate the market value of the debt. (20 points) c. Hadley Holdings has 100 million shares outstanding trading at $ 10 a share. In conjunction with the estimated market value of debt in (b), estimate the bottom-up levered beta for the rm. (You can assume a marginal tax rate of 40%.) ( 10 points)

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