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What is the unlevered cost of capital of smu

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Reference no: EM132826174

Assume capital markets are perfect.

SMU Corp is an all equity company, its total equity capitalization (market cap) is of $575 million, and its equity beta is 1.7. SMU Corp has $87 million in cash, which is considered risk-free. Assume the risk-free rate is 4% and the market risk premium is 4%.

What is the unlevered cost of capital (ru) of SMU?

Round up to 4 decimal places please.

Reference no: EM132826174

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