Reference no: EM133075668
Question - Amber Company has IDR 50,000,000 assets funded with IDR 20,000,000 debt and IDR 30,000,000 equity. Amber's current beta is 1.4 and the tax rate is 40%.
a) Using Hamada's equation, calculate the unlevered beta or bU.
b) What happens to Amber's beta when the company changes its structure the capital becomes IDR 30,000,000 debt and IDR 20,000,000 equity?
c) What is the company's cost of capital if the company changes its capital structure by Rp30,000,000 debt and Rp 20,000,000 equity?. (Hint: Risk free rate 6%, Cost of debt 10%, and Market risk premium 6%).
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