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QUESTION
In mid-2012, AOL Inc. had $100 million in debt, total equity capitalization of $3.2 billion, and an equity beta of 0.85 (as reported on Yahoo!...
In mid-2012, AOL Inc. had $100 million in debt, total equity capitalization of $3.2 billion, and an equity beta of 0.85 (as reported on Yahoo! Finance). Included in AOL's assets was $1.4 billion in cash and risk-free securities. Assume that the risk-free rate of interest is 3.1% and the market risk premium is 4.1%.
a. What is AOL's enterprise value?
b. What is the beta of AOL's business assets?
c. What is AOL's WACC?
