Reference no: EM132907983

ICI Company has unlevered beta of 1.4. Risk free rate in market is 12.5% and investor required 8% risk premium to invest in market. Tax rate of company is 40%. Following is the schedule of borrowing rate obtained from bank for different level of debt level in capital structure. Firm anticipating Rs. 150,000 operating profit (EBIT)

Weight of debts          Cost of Debts(kd)
0                                  0.2
0.2                                  0.2
0.4                               0.22
0.6                                 0.25
0.8                                     0.3

Question 1: Calculate Beta level at 20% debt weight?

Question 2: Calculate Beta level at 40% debt weight?

Question 3: Calculate Beta level at 60% debt weight?

Question 4: Calculate Beta level at 80% debt weight?

Question 5: Calculate cost od equity at 100% Equity weight?

Question 6: Calculate cost od equity at 80% Equity weight?

Question 7: Calculate cost od equity at 60% Equity weight?

Question 8: Calculate cost od equity at 40% Equity weight?

Question 9: Calculate minimum wacc?

Question 10: Calculate Maximum firm value?