ChipKebap, a newly public firm, is analyzing projects that are part...

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ChipKebap, a newly public firm, is analyzing projects that are part of its major expansion strategy. The company is very optimistic about becoming a dominant player in the rapidly developing market for German-Turkish-Texan-style döner kebab. Assume that ChipKeba has a target debt-to-value ratio of 0.4, a debt beta of 0.3, and a tax rate of 40% a) Use a risk-free rate is of 2% and a market risk premium of 5% to estimate ChipKebap' cost of equity, cost of debt, and weighted average cost of capital. Information on compara firms is below. (15 points) Equity Debt/ Comparable firm beta Debt beta value Good Food 0.54 0.10 14% Cheap Food 1.88 0.40 79% Healthy Food 0.97 0.25 35% Fancy Food 0.95 0.35 45% Das Essen 0.75 0.30 40% La Nourriture 1.02 0.30 38%

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