Please don't use % , just use numbers with decimals, like if the answer is...
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Please don't use % , just use numbers with decimals, like if the answer is 0.054321, just put 0.054 don't use %
Genuine Care is a company that offers health care services. The company has $200 million in interest-bearing debt (in book value and market value terms). The firm has 26 million shares trading at $ 11 a share, and the unlevered beta of comparable firms in the health care business is 0.65. The firm has a current rating of B, with a default spread of 0.05 over the risk-free rate. The risk-free rate is 0.035, the equity risk premium is 0.07 and the corporate tax rate is 40%.
1- What is the levered beta for the firm? 2- Estimate the cost of equity for the firm
3- Estimate the before-tax cost of debt for the firm
4- Estimate the after-tax cost of debt for the firm
5- What is the market value weight of debt?
6- What is the market value weight of equity?
7- Estimate the cost of capital for the firm
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