Market Value Balance Sheet and Cost of Capital for the firm Econtainer Inc. Assets Liabilities Cost of Capital Cash 650

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Market Value Balance Sheet And Cost Of Capital For The Firm Econtainer Inc Assets Liabilities Cost Of Capital Cash 650 1 (67.27 KiB) Viewed 34 times

Assume the new project is average risk for the firm, and the
firms wants to hold constant D/E ratio.
Answer the following questions:
a) calculate the unlevered cost of capital?
b) calculate the post-tax weighted average cost of capital?
c) what is the debt capacity for the new project in year 0?
Market Value Balance Sheet and Cost of Capital for the firm Econtainer Inc. Assets Liabilities Cost of Capital Cash 650 Debt 1050 Debt 3% Other Assets 1200 Equity 800 Equity 15% Corporate Tax: TC 50% The firm has a new project available. New project Free Cash Flows: Year 0 1 Free Cash Flows($445) $552.5