1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
vekshin1
3 years ago
11

The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financ

ing, what will be the equity beta of the levered firm
Business
1 answer:
Citrus2011 [14]3 years ago
5 0

The beta of an all equity firm is 2.3. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the equity beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.) Provide your answer with 2 digits after the comma.

Answer:

4.40

Explanation:

Equity beta, is a term in business or economics, which is.oftemr referred to as Levered beta, which measures the risk of a firm in respect to debt and equity in its capital structure to the volatility of the stock market.

Therefore, Formula for equity beta is giving as = βE = equity firm + (debt/equity)(equity firm - beta of debt)

Given that, equity firm = 2.3

Capital structure to debt = 50% = 0.5

Capital structure to equity = 50% = 0.5

Beta of debt = 0.2

βE = 2.3 + (0.5/0.5)(2.3 - 0.2) =

2.3 + (0.5/0.5)(2.3 - 02) =

= 2.3 + (1)(2.1)=

2.3 + 2.1= 4.40

Hence, the final is 4.40

You might be interested in
Why do you think pmi created a separate knowledge area for stakeholder management?
DaniilM [7]
PMI stands for the project management institute and organization which in non-profit for the project management in the United States.
And i think Project management institute created separate knowledge area for stakeholder management to keep the information of stakeholder control within the task or project.
3 0
3 years ago
Distributive, procedural, and interactional are
Jet001 [13]

Answer:

Organizational justice

Explanation:

Organizational justice concerns employees' understanding of fairness, results, and processes within a company. Distributive, procedural, and interactional are the three types of organizational justice that companies must embrace in order to have happy and productive employees.

4 0
2 years ago
Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 tr
hammer [34]
<span>GDP = C + I + G + NX = $5.5 trillion + $1 trillion + $1.5 trillion + $.75 trillion - $1.25 trillion = $7.5 trillion

Business is hard T^T</span>
6 0
2 years ago
Which of the following has given consumers unprecedented power to express likes and dislikes, compare prices, find the best deal
STatiana [176]

Answer:

The correct answer is letter "A": Digital technology.

Explanation:

When talking about commerce, digital technology has allowed buyers and sellers from different parts of the world find and offer goods and services without the need to physically meet. The transaction also includes all the steps and efforts necessary to deliver consumers the product at the door of their houses.

Besides, digital technology has allowed consumers to express their ideas massively based on the experience they had with the digital vendors and price so other prospective consumers have an idea of the service provided by the merchant is good or if they should look for a different seller.

8 0
2 years ago
Associated Breweries is planning to market alcohol-free beer. To finance the venture it proposes to make a rights issue at $10 o
Tomtit [17]

Answer:

Number of new shares:

= 100,000×(1÷2)

= 50,000

Amount of new investment:

= 50,000×$10

= $500,000

Total value of company after issue:

= $500,000+100,000×$40

= $4,500,000

Total number of shares after issue:

= 100,000+50,000

= 150,000

Share price after issue:

= $4,500,000÷150,000

= $30

3 0
3 years ago
Read 2 more answers
Other questions:
  • A master production schedule quantity of 300 units will arrive in week 6. Weekly demand over weeks 3 through 10 is forecasted at
    9·1 answer
  • Without technological advancement, how can a nation achieve economic growth
    13·2 answers
  • "I promise to pay $5,000 to Lorenzo on or before August 1, 2001, in return for the same amount borrowed from him on May 1, 2001.
    10·1 answer
  • Choose a topic related to a career that interests you and think about how you would research that topic on the Internet. Set a t
    9·1 answer
  • Low Fly Airline is expected to pay a dividend of $7 in the coming year. Dividends are expected to grow at the rate of 15% per ye
    11·1 answer
  • Treasury spot interest rates are as follows: Maturity (years) 1 2 3 4 Spot rate (EAR) 1.4% 2.8% 3.6% 4.5% What is the price of a
    13·1 answer
  • Larned Corporation recorded the following transactions for the just completed month. $80,000 in raw materials were purchased on
    15·1 answer
  • The mission of a company lays out some desired future state and articulates that the company would like to achieve
    7·1 answer
  • A company’s unit costs based on 100000 units are: Variable costs $75 Fixed costs 30 The normal unit sales price per unit is $165
    8·1 answer
  • Which of the following items might require additional coverages on a Homeowners Policy?
    15·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!