3. Ice Lane and Ice-Land are two publicly traded fresh beverage producing companies Since the underlying risk exposure o

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3 Ice Lane And Ice Land Are Two Publicly Traded Fresh Beverage Producing Companies Since The Underlying Risk Exposure O 1 (32.93 KiB) Viewed 20 times

3. Ice Lane and Ice-Land are two publicly traded fresh beverage producing companies Since the underlying risk exposure of both companies is identical their asset beta will also be equal However, both companies differ in their capital structure Ice Lane has a DVE or 05, beta of lovered equity is 15, while the market risk premium is 50% and the risk-free rate is 40%. Assume all debitis risk free and issued at the risk free rate. Further assume M&M world without taxes • What is Ice Lane's return on lovered equity? (please write to one decimal place, without sign) • What is Ice Lane' WACC (please write to one decimal place, without sign) Suppose that Ice Land has a target D/E of 10 • What is Iceland's return on levered equity? (please write to one-decimal place, without sign) • What is Ice-Land's WACC? (please write to one decimal place without sign) DE