Triangle Ltd is an ASX listed company that aims to acquire 100% shares of an unlisted firm, Square Ltd, both of which operate in the same industry.

The Triangle capital structure comprises 50% Debt and 50% equity with a beta debt of 1.34. To finance acquiring Square, Triangle is facilitated to borrow up to 35% of funds needed with no material effect on its credit rating.

If the risk-free rate is 4.3% and the return on market is 9.3%, calculate the Triangle cost of equity using CAPM.

How much is Triangle WACC if the tax rate is 30% and the cost of debt is 7.5%?

Calculate the WACC of Square.

Explain in detail what would happen if Triangle evaluated the purchase of Square using the WACC of Triangle.

Answer rating: 100% (QA)

a Step 13 Cost of Equity of Triangle Risk Free Rate ... View the full answer