## (Solution document) I have come across a problem that I am trying to solve on an excel spreadsheet.

I have come across a problem that I am trying to solve on an excel spreadsheet. I tried to upload my document to show the work I've currently done for questions 5, 6 and 7 but I can't seem to find where to upload it. Here is the question and the problems I am stuck on.

Jupiter, Inc. has equity with a market value of \$9.9 million and outstanding debt with a market value of \$4.4 million and a current yield to maturity of 8.0%. The risk-free rate is 2% and the expected return on the market is 10%. The levered beta of the company is 1.27. The firm pays no taxes.

1) What would be the proper calculation to find the company's debt/equity ratio.

2) Determine the company's cost of capital.

3) Determine the unlevered beta and the cost of capital for an identical all-equity firm.

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This question was answered on: Dec 08, 2020

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