Estimate the cost of capital after the acquisition

Reference no: EM13903750

DayTop Inns is considering acquiring SwissHotels, another hotel company (which derives 100% of its revenues from hotels) for $400 million, three quarters of which it plans to fund by a new debt issue - which will cause its rating to drop and its cost of debt to rise to 5.5% - and a quarter by issuing new stocks. Estimate the cost of capital after the acquisition.

Reference no: EM13903750

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