[mahaw]

By calculating the asset beta of larger company and taking only 20% of it. Then calculating asset beta of the other company. At the end taking 50% of both and adding them to get overall asset beta.

[mahaw]

I rounded off my figures to 9%. Did you calculate the yield rates?

[mahaw]

– Question 1 was lengthy but was confusing. I got 16% as my cost of equity, 6% as my cost of debt (assuming that Rf for only year 4 bond was to be considered, I ignored *the to be calculated as it wasn’t needed). I got WACC equal to 9%.
– Question 2 was confusing as it’s my weakest topic in p4.
– In question 3: I got 60% as a gain percentage for the acquirer. I’m not sure if it’s right.

[Author]

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