the total market value of equity share of xyz company is Rs 9000000 and the total value of the debt is Rs in Rs 6000000.
January 9th, 2018
the total market value of equity share of xyz company is Rs 9000000 and the total value of the debt is Rs in Rs 6000000. The treasurer estimated that the beta of the stock is currently 1.9 and that the expected risk premium on the market is 12 percent. The treasury bill rate is 9 percent. Required: (1) what is the beta of the company’s existing portfolio of assets? (2) Estimate the company’s cost of capital and the discount rate for an expansion of the company’s present business.