Midland_corporate WACC

Midland_corporate WACC - D/V Beta 37.92% 1.25 from analysis...

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Worksheet for Midland Energy's corporate WACC Table 1 WACC based on 2006 data Note D 79,508 based on 2006 balance sheet E 130,169 based on 2006 year end stock price V 209,677 sum of D and E D/V 37.92% beta 1.25 r_D 6.60% yield on 30-year T-bond + credit spread of A+ corporate bonds r_E 11.23% yield on 30-year T-bond + beta estiamte of 1.25 * 5% of market risk premium Tc 40% WACC 8.47% Table 2 Equity Beta with different capital structure Note that the D/V of 0.38 based on 2006 data is different from the target ratio of 42.2% in Table 1
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Unformatted text preview: D/V Beta 37.92% 1.25 from analysis in Table 1 0.91 this is the unlevered beta, or asset beta 42.20% 1.32 this is beta correspoding to the target ratio of 42.2% Table 3 WACC with the target ratio of 42.2% D/V 42.20% beta 1.32 r_D 0.066 yield on 30-year T-bond + credit spread of A+ corporate bonds r_E 11.58% yield on 30-year T-bond + beta estiamte of 1.32 * 5% of market risk premium Tc 40% WACC 8.36%...
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This note was uploaded on 10/07/2011 for the course FIN 494 taught by Professor Rejinguo during the Fall '11 term at Ill. Chicago.

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