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Category > Business & Finance Posted 07 Jun 2017 My Price 11.00

e total market value of Okefenokee Real Estate Company's equity

The total market value of Okefenokee Real Estate Company's equity is $6 million, and the total value of its debt is $4 million. The treasurer estimates that the beta of the stock currently is 2.0 and that the expected risk premium on the market is 5%. The Treasury bill rate is 3%.

What is the required rate of return on Okefenokee stock?
Required rate of return = ______%

What is the beta of the company's existing portfolio of assets? The debt is perceived to be virtually risk-free. (Round your answer to 2 decimal places)
Weighted-average beta = _______

Estimate the weighted-average cost of capital assuming a tax rate of 20%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
WACC = _______ %

Estimate the discount rate for an expansion of the companyAc€?cs present business. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Discount Rate = _______ %

Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 2.2. What is the required rate of return on OkefenokeeAc€?cs new venture? (You should assume that the risky project will not enable the firm to issue any additional debt.)
Required Rate of Return = ______ %

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Status NEW Posted 07 Jun 2017 07:06 AM My Price 11.00

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