Bridgetron
an Analyst Wants to Value the Sum of the Debt

question 28

Essay

Bridgetron
An analyst wants to value the sum of the debt and equity capital of the firm and is provided with the following information:
$\begin{array}{l}\begin{array}{l}\text { Total Assets } \\\text { Interest-Bearing Debt } \\\text { Average Pre-taxborrowing cost } \\ \text { Common Equity: } \\\text { Book Value } \\\text { Market Value } \\\text { Income Tax Rate } \\\text { Market Equity Beta } \\\text { Risk-free Rate }\\\text { Market Premium }\\\end{array}\begin{array}{lll}\$ 25,675\\\$ 18,525 \\9.25 \% \\\\\$ 8,950 \\\$ 34,956 \\35 \% \\1.05 \\3.8 \% \\5.7\%\end{array}\end{array}$
-An analyst wants to value the common shareholders' equity of Bridgetron,compute the relevant cost of capital that should be used.

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Definitions:

Innominate Artery

Another term for the brachiocephalic artery, which is a major blood vessel that supplies blood to the right arm and the right side of the head and neck.

External Carotid Artery

A major artery that supplies oxygenated blood to various facial and cranial structures.

Median Antebrachial

The median antebrachial vein is a vein that runs along the medial aspect of the forearm and is involved in the drainage of blood from the arm.

Median Cubital

A vein located in the cubital fossa of the arm, commonly used for venipuncture to draw blood or administer intravenous medications.