Northern+Forest+Products

Northern+Forest+Products - Name of Division Beta Paper...

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Company Input Data Return on Market 14.2% (This rate is the long-run return on NYSE Index.) Risk Free Rate 6.5% Company's Debt Allocation 42.0% Information taken from third page of case, 2nd and 4th paragraghs) Company's Equity Allocation 58.0% Company's Cost of Debt 12.0% Tax Rate 35.0% Required Premium 4.0% (This rate is required by management in order for them to accept project - see first paragragh of second page of the case.) Divisional Data
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Unformatted text preview: Name of Division Beta Paper Products 38% 1.12 Timber Production 33% 0.98 Wood Products 15% 0.82 Plastic Products 9% 1.28 Real Estate 5% 1.43 Calculations Division Cost of Equity WACC Hurdle Rate Paper Products 15.12% 12.05% 16.05% Timber Production 14.05% 11.42% 15.42% Wood Products 12.81% 10.71% 14.71% Plastic Products 16.36% 12.76% 16.76% Real Estate 17.51% 13.43% 17.43% Percentage of Assets...
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