The question is a company is going for a new project. and the company’s cost of debt is 6 % and its D/E
ratio is 19%, tax rate is 30%, rf = 2.49%, MRP is 7.21%. the company expects to finance the furniture division using the same mix of debt and equity. now i have calculated the levered beta for project is 1.2. but how should i calculate the cost of capital for project? should i should CPAM to get Re (this is the cost of capital) or should i get Re of the project and then use wacc with tax formula.
thank you very much.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more