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What unleveraged discount rate be used to value pulpless

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Question - Mondo Cult is considering acquiring pulpless. Pulpless is currently financed with 0.22% debt at an interest rate of 0.14%. If the acquisition takes place the debt level will continue at the 0.22% target level and the interest rate will remain the same. Pulpless's pre-merger beta is 1.3, and its tax rate is 0.39%. The risk-free rate is 0.04% and the market risk premium is 0.05%. What unleveraged discount rate will be used to value pulpless?

Reference no: EM132601989

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