Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta 1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75 % (Round to two decimals) Use 99 if the answer is indeterminate

Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual. Use data below: Risk Free Rate=5% Market Return=12% Unlevered Beta 1.5 Unlevered Cost of Capital=15.5% Find Sunshine's WACC with leverage Sunshine's WACC with leverge is 29.75 % (Round to two decimals) Use 99 if the answer is indeterminate

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 6P

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