Morningside nursing home a not-for-profit corporation , Ask an Expert

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Morningside Nursing Home, a not-for-profit corporation, Its tax exempt debt currently requires an interest rate of 6.2 percent and its target capital structure calls for 60 percent debt financing and 40 percent equity (fund Capital) financing. The estimated costs of equity for selected investors owned healthcare companies are given below:

Glaxo Wellcome      15.0%
Beverly Enterprises 16.4
HEALTHSOUTH        17.4
Humana                   18.8

a. What is the best estimate for Morningside's cost of equity?

b. What is the firm's corporate cost of capital?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9792119

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