What is golden weighted average cost of capital

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Reference no: EM131591931

You need to estimate the equity beta for Golden Clothiers, Inc. Golden's debt-to-equity ratio is 77%, and its debt beta is 0.35. The following table shows the betas, debt betas and debt-to-equity ratios for three comparable clothing retailers (all taken from finance.yahoo.com). Assume the tax rate is 30% for all four firms. Please show your work and clearly label your answers. Company Beta D/E Ratio Debt Beta TJ Maxx 1.72 0.35 0.3 New York & Co 2.08 0.13 0.3 Express, Inc. 1.55 0.22 0.3 Assuming debt is risk-free, use the information given above to estimate the unlevered equity betas of each of these companies. Assuming debt is risk-free, what is your estimate of Golden Clothiers levered equity beta? The current risk-free rate is 1.5% and the return on the market is 8.2%. If Golden's before-tax cost of debt is 6.24% and it has no preferred stock in its capital structure, what is Golden's weighted average cost of capital?

Reference no: EM131591931

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