Parkville Corp

Get your Assignment in a Minimum of 3 hours

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

Free Inquiry Order A Paper Now Cost Estimate

Parkville Corp has just completed a recapitalization which raised its debt/equity ratio to 3, it’s equity beta to 2.2, and it’s debt beta to 0.5. Before the recapitalization, the firm’s debt/equity ratio was 0.5 and it’s debt was risk-free. The risk-free rate is 3% and the expected return on the market is 8%. Assume perfect capital markets.

a) What is Parkville’s unlevered beta? b) What was the beta of Parkville stock before the recapitalization? c) What is Parkville’s cost of equity before and after the recapitalization? d) Did Parkville’s cost of equity change after the recapitalization? Briefly explain why or why not.

"Is this question part of your assignment? We Can Help!"

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"

Get Started