Harris Inc., has equity with,a market value of $23.2 million and debt with,a market value,of $11.6...

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Harris Inc., has equity with,a market value of $23.2million and debt with,a market value,of $11.6 million . Treasurybills that mature in one year yield 4 percent per yearbandthe,expected return on the market portfolio is 10 percent. the betaof the,company's equity is 1.17. The company pays no taxes.
a. Debt-equity ratio=
b. Weight,average cost of capital=
c. Cost of capital=

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Solution a Debtequity ratio 050 Working Notes Debtequity ratio Market value of Debt Market value of Equity 116 million 232 million 116232 050 b Weight average cost of capital WACC 868 Working Notes Cost of equity Ke using CAPM Ke Required return of See Answer

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Harris Inc., has equity with,a market value of $23.2million and debt with,a market value,of $11.6 million . Treasurybills that mature in one year yield 4 percent per yearbandthe,expected return on the market portfolio is 10 percent. the betaof the,company's equity is 1.17. The company pays no taxes.a. Debt-equity ratio=b. Weight,average cost of capital=c. Cost of capital=