Requireda. Compute the unlevered market equity (asset) beta of Equifax. [See Chapter 11.]b. Assuming that the unlevered market equity beta of Equifax is appropriate for Experian compute the equity beta of Experian after the buyout with its new capital structure.c. Compute the weighted average cost of capital of Experian after the buyout. Assume a risk-free interest rate of 4.2 percent and a market risk premium of 5.0 percent. d. The analysts at the buyout firm project that free cash flows for all debt and equity capital stakeholders of Experian will increase 5.0 percent each year after Year 10. Compute the present value of the free cash flows at the weighted average cost of capital. Ignore the midyear adjustment related to the assumption that cash flows occur on average over the year. In computing the continuing value apply the 5.0 percent projected growth rate directly to the free cash flows of Year 10.e. Assume that the buyout group acquires Experian for the value determined in Part d. Assuming that actual free cash flows to all debt and equity capital stakeholders coincide with projections will Experian generate sufficient cash flow each year to service the debt? Explain.
