A power equipment company has 85% debt-to-assets ratio and an equity beta of 1.25.
January 6th, 2018
A power equipment company has 85% debt-to-assets ratio and an equity beta of 1.25. The risk-free rate is 6.5% and the expected market rate of return is12.5%. The corporate taxes are 35%. What is the opportunity cost of capital of the company? How much is the required return on equity?