O WORDS POWERED BY TINY Save Answer QUESTION 5 20 points Creperu is a Spanish company. The Spanish risk-free rate is 4 percent. The risk premium in the Spanish stock market is 7 percent. Creperu's beta is 2.5 when measured against the Spanish market. Creperu's pretax borrowing cost in Spain on new long-term Euro denominated debt is 7 percent. The debt-to-equity ratio for Creperu is 40 percent at this cost of debt. Interest payments are tax deductible in Spain at the marginal corporate tax rate of 42%. Creperu could appeal to international investors by listing on the New York stock exchange. If they chose to do so, Creperu could borrow Euros in the New York market at a pretax cost of 6 percent. International investors are willing to tolerate a 45 percent debt-to-equity mix at this cost of debt. With a 45 percent debt-to-equity ratio, the beta of Creperu is 1.8 against the MSCI World index. The risk premium on the world market portfolio is 5 percent. Suppose Creperu generated after-tax operating cash flow of 25,000,000 last year, and that earnings are expected to grow at 5 percent perpetually. Find Creperu's value assuming they do not have access to the international capital markets (segmented markets). Creperu raises all of its capital in Madrid which is assumed to be segmented from all other capital markets. Show all necessary calculations to support your answer. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I US Paragraph Arial 14px : A IK 46 O E V x? X2 > ABC TT 77 . x EXE RH ODDLERE MacBook Air DI 58 80 888 57 FS $ % & 7 8 6 V o 2 5 3 3 a O WORDS POWERED BY TINY Save Answer QUESTION 5 20 points Creperu is a Spanish company. The Spanish risk-free rate is 4 percent. The risk premium in the Spanish stock market is 7 percent. Creperu's beta is 2.5 when measured against the Spanish market. Creperu's pretax borrowing cost in Spain on new long-term Euro denominated debt is 7 percent. The debt-to-equity ratio for Creperu is 40 percent at this cost of debt. Interest payments are tax deductible in Spain at the marginal corporate tax rate of 42%. Creperu could appeal to international investors by listing on the New York stock exchange. If they chose to do so, Creperu could borrow Euros in the New York market at a pretax cost of 6 percent. International investors are willing to tolerate a 45 percent debt-to-equity mix at this cost of debt. With a 45 percent debt-to-equity ratio, the beta of Creperu is 1.8 against the MSCI World index. The risk premium on the world market portfolio is 5 percent. Suppose Creperu generated after-tax operating cash flow of 25,000,000 last year, and that earnings are expected to grow at 5 percent perpetually. Find Creperu's value assuming they do not have access to the international capital markets (segmented markets). Creperu raises all of its capital in Madrid which is assumed to be segmented from all other capital markets. Show all necessary calculations to support your answer. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I US Paragraph Arial 14px : A IK 46 O E V x? X2 > ABC TT 77 . x EXE RH ODDLERE MacBook Air DI 58 80 888 57 FS $ % & 7 8 6 V o 2 5 3 3 a