Bailey and Sons has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 40%. What would Bailey's beta be if it used no debt, i.e., what is its unlevered beta? a. 0.79 b. 0.71 c. 0.67 d. 0.64 e. 0.75
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- Company has a levered beta of 1.29, its capital structure consists of 36% debt and the remaining as equity, and its tax rate is 40%. What would the company's beta be if it used no debt? Round your answer to two decimal places of a whole number. (Hint: Use the Hamada equation.) Group of answer choices: 0.92 0.94 0.98 1.00 0.96A firm's unlevered beta is 0.5 and tax rate is 30%. If it is with 20% debt. What is the firm's levered beta? 0.9012 1.2533 0.5875 0.6235A company has a levered beta of 1.60, its capital structure consists of 50% debt and 50% equity, and its corporate tax rate is 21%. What would the firm’s beta be if it had no debt, i.e., what is its unlevered beta? 0.39 0.80 1.00
- 1. Hawkeye Corp has an equity beta of 1.10 and a debt beta of 0.2. The company faces a 20% marginal tax rate and has a debt-to-equity ratio of 0.5. How much of Hawkeye’s equity beta is due to the business, or asset, risk of the company (i.e., asset beta)? Answers: 1.820 1.125 (Incorrect Answer) .700 .843 (Incorrect Answer: Hint…Use D/E ratio in the beta formula, not the debt ratio)9. Determining the optimal capital structure Aa Aa Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60% 1.67 0.45 24.56 50% 50% 1.72 0.51 25.78 60% 40% 1.78 0.57 27.75 70% 30% 1.84 0.62 26.42 Which capital structure shown in the preceding table is Transworld Consortium Corp.'s optimal capital structure? Debt ratio 50%; equity ratio 50% Debt ratio = 30%; equity ratio = 70% Debt ratio 70%; equity ratio 30% Debt ratio = 40%; equity ratio = 60% Debt ratio 60%; equity ratio = 40% Consider this case: Globex Corp. has a capital structure that consists of 30% debt and 70% equity. The firm's current beta is 1.15, but management wants to understand Globex Corp.'s market risk without the effect of leverage. If Globex Corp. has…XYZ currently has a capital structure of 40% debt and 60% equity. XYZ's levered beta is 2.0 under its current capital structure. The firm's tax rate is 40%. What is the value of the XYZ's unlevered beta? show your answer to 1 decimal place (example: a beta of 1.2)
- What proportion of a firm is equity financed if the WACC is 14%, the after-tax cost of debt is 7.0%, the tax rate is 35%, and the required return on equity is 17%? (Answer as a whole percentage, i.e. 5.25%, not 0.0525)Company ABC is looking to figure out its cost of equity. The company operates in the construction business where, based on a list of comparable firms, the average beta is 0.9. The comparable firms have an average debt-to-equity ratio of 0.5. Company ABC has a debt-to-equity ratio of 0.25 and a 30% tax rate. What is the ABC's Beta? O a. 0.67 O b. 0.9 OC 0.79 O d. 0.25A firm's equity beta is 1.1. Its tax rate is 30 per cent and debt-equity ratio is 4:5. What is the asset beta O a. 0.91 O b. 0.71 O c. 0.81 O d. 0.61
- 1) Counts Accounting has a beta of 1.50. The tax rate is 35%, and Counts is financed with 40% debt. What is Counts' unlevered beta? Round your answer to two decimal places. (2) Ethier Enterprise has an unlevered beta of 1.05. Ethier is financed with 45% debt and has a levered beta of 1.15. If the risk free rate is 5% and the market risk premium is 5%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk?Relever Inc. has a debt-to-equity (D/E) ratio of 0.3 ; its target D//E is 1.5 . Relever currently has an estimated beta of 1.7. Relever's estimated tax rate is 30 percent. What is the estimate of Relever's beta at its target D/E? Relever's beta at its target (D//E)^(**) of 1.5 is estimated to be (Vinay
