As connoisseurs of elegant fast food cuisine, we are interested in making a bid for the Greens-to-Go restaurant division of SlurpCo, Inc. SlurpCo has three primary divisions, soft drinks, Major League football franchises, and the G to G restaurants. Given the unique risk profiles for each of these divisions, it is imperative we estimate G to G's divisional beta to determine its fit into our company. Consider the following information: Company Name Debt Ratio Levered Equity Beta Marginal Tax Rate Revenues ($ Mill) Parent Company 60% 0.95 40% Greens to Go 65% ?? 40% Burger Doodle 35% 0.75 35% 1.95 Southern Fried Taco 45% 1.25 30% 2.85 Buffet Pizza Company 40% 1.05 27% 0.75 Estimate a levered equity beta for the Greens-to-Go division using the both the arithmetic and the weighted averages.
As connoisseurs of elegant fast food cuisine, we are interested in making a bid for the Greens-to-Go restaurant division of SlurpCo, Inc. SlurpCo has three primary divisions, soft drinks, Major League football franchises, and the G to G restaurants. Given the unique risk profiles for each of these divisions, it is imperative we estimate G to G's divisional beta to determine its fit into our company. Consider the following information:
|
Company Name |
Debt Ratio |
Levered Equity Beta |
Marginal Tax Rate |
Revenues ($ Mill) |
|
Parent Company |
60% |
0.95 |
40% |
|
|
Greens to Go |
65% |
?? |
40% |
|
|
|
|
|
|
|
|
Burger Doodle |
35% |
0.75 |
35% |
1.95 |
|
Southern Fried Taco |
45% |
1.25 |
30% |
2.85 |
|
Buffet Pizza Company |
40% |
1.05 |
27% |
0.75 |
- Estimate a levered equity beta for the Greens-to-Go division using the both the arithmetic and the weighted averages.
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