Question: Solve not in excel and provide all the formulas You have been asked to evaluate the quality of investments at an some inc., a firm

Solve not in excel and provide all the formulas

You have been asked to evaluate the quality of investments at an some inc., a firm that open 2 business books and pens. You have been provided the following information of the businesses:

Market value of assets

Unlevered beta of business

books

100 000 000$

1.30

pens

100 000 000$

0.70

200 000 000$

A firm has 100 million shares, trading at $10 a share and faces a marginal tax rate of 31% . Company`s bonds have an A rating and a dedefault spread ( over risk free rate) of 4%. The risk rate is 6% and the equity risk premium is 9%.

1) Market value of equity and market value of debt

2) Unlevered beta for the total firm ( can be found as a weighted average) and unlevered/levered beta for the firm

3) Cost of equity and debt

4) Cost of capital ( WACC)

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