What is acetate debt-equity ratio

Reference no: EM131931969

Question: Acetate, Inc., has equity with a market value of $23.7 million and debt with a market value of $9.48 million. The cost of debt is 10 percent per year. Treasury bills that mature in one year yield 6 percent per year, and the expected return on the market portfolio is 11 percent. The beta of Acetate's equity is 1.22. The firm pays no taxes.

a. What is Acetate's debt-equity ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

b. What is the firm's weighted average cost of capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

c. What is the cost of capital for an otherwise identical all-equity firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Reference no: EM131931969

Questions Cloud

Weaknesses of the mental health system : These videos only discuss the weaknesses of the mental health system in America. One man tried to get his son an appointment with a physiatrist

Describe a small business that you would like to start : Describe a small business that you would like to start or purchase. How did the companies allocate their funding last year?

Describe the characteristics of potential customers : Identify the physical attributes, customer benefits, and competitive advantages of the product (or service) to be offered by the organization.

Conduct multiple linear regression analyses : IENG 314 - Semester Design Project - Phase 2 ALL-LineX Superior Energy Performance. Based on the results from part 1, conduct multiple linear regression analyse

What is acetate debt-equity ratio : What is Acetate's debt-equity ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).

Recommend working with preferred vendors : Some experts recommend working with preferred vendors even if their prices are higher than other vendors. Why do you think this is the case?

Find the average return and standard deviation of returns : Find the average return and standard deviation of returns over the past 10 years.

Transitioning to a continuous process : As your enterprise implements transitioning to a continuous process, what obstacles can they expect?

How the calculated results from evm are part of an audit : Write an essay detailing the basic elements of earned value management. Discuss how the calculated results from EVM are part of an audit.

User Account

All Pages