East midland furniture emf manufacturer is aiming to expand

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East Midland Furniture' (EMF) manufacturer is aiming to expand their business in the UK by establishing a new production plant in London. This project will cost the company GBP 50 millon. The following information will help you to calculate the cost of equity and the weighted average cost oc capital (WACC).- The company decided to establish a separate company for this project and to name it 'London Furniture'- London Furniture plans to finance this project using 60% equity and 40% debt.- London furniture reached a deal to issue a 5 year bond with an annual coupon of 10% of the face-value of the bond.- T-bond annual rate 7.0%- Expected return on FTSE500 is 18%- The variance of FTSE500 return is 3- The covariance of FTSE500 and EMF's stock is 6- EMF has Debt/Equity = 1.2- The tax rate is 40%Required:Calculate the following:a) The Beta and cost of equity for EMFb) The unlevered beta for EMFc) The levered beta and the cost of equity for London Furnitured) The after tax weighted average cost of capital for London FurnitureProvide the formula's used. Your calculations and methods for arriving at an answer should be shown.

Reference no: EM13483143

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