Question: please help to solve the problem, by showing step-by-step solution Kjrlighet Company is a Norwegian home textile and decoration company. Its total market value is
please help to solve the problem, by showing step-by-step solution
Kjrlighet Company is a Norwegian home textile and decoration company. Its total market value is Nkr 3 million. The total value of its debt is Nkr 2 million. The treasurer estimates that the beta of the stock currently is 1.1 and that the expected risk premium on the market is 9 percent. The Treasury bill rate is 3 percent. Please enter your result with two digits after the decimal break. Depending on your location this break is either," or ".". Do not just cut off the remaining decimals, but apply commercial rounding! a) What is the required rate of return on Kjrlighet stock? Required rate of return: b) What is the beta of the company's existing portfolio of assets? The debt is perceived to be virtually risk-free. Beta of the company's assets: c) Estimate the weighted average cost of capital assuming a tax rate of 30 percent Weighted average cost of capital: % d) Estimate the discount rate for an expansion of the company's present business
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