Protekter and gambler pkgr currently has debt equity ratio, Ask an Expert

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Protekter and Gambler (PKGR) currently has debt equity ratio of approximately 0.22. The current beta of its stock is 0.55. The expectation of the market premium is 9.5%. PKGR can borrow at 4.5%, just 20 basis points over the risk free rate of 4.3%

1) What is the weighted average cost of capital with the current capital structure?

2) If PKGR wants to increase its debt-to-equity ratio to 0.55 through a leveraged recap, what is the beta of PKGR after this transaction?

3) What is the weighted average cost of capital after transaction?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92811853

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