Compute the beta equity for company new

Assignment Help Financial Management

Reference no: EM131884756

The company NEW is about to be listed in the stock market. The target capital structure of this company is to have the same amout of Debt and Equity, in market value terms.

The beta debt of the company NEW is estimated to be 0.20. Knowing that the operations of the company have the same risk that the average of the sector, that the corporate tax rate is 35%, and the data in the following table are referred to other firms in the same sector; compute the beta equity for company NEW after its listing in the stock exchange.

Company 1	Company 2	Company 3
Millions of shares	150	95	220
Price per share	10.00€	20.00€	4.00€
Market value of debt (M)	500€	700€	500€
Beta debt	0.15	0.20	0.15
Beta equity	1.20	1.00	1.40

Reference no: EM131884756

Questions Cloud

How can the activity rates for the various activities be use : How can the activity rates (i.e. cost per activity) for the various activities be used to target process improvements for Johnson Associates?

How should you redesign your strategy : If you decide to seek the higher interest rate in available in USD but not covering the forward dollar receipts, how should you redesign your strategy ?

What volume must be reached in number of lobster rolls : Mr. Mobile would like an after-tax net income of $65,000 at a tax rate of 30%. What volume reached in number of lobster rolls in order to obtain desired income?

What is the economic order quantity : If a company has annual sales of 3,000,000, a cost of placing an order of $55, and a 45% carrying cost, what is the Economic Order Quantity?

Compute the beta equity for company new : Compute the beta equity for company NEW after its listing in the stock exchange.

How much should you be willing to pay today for promise : What is the present value of $1,000 received three years from today if interest rates are currently 6 percent?

Compute a materials price variance for the plates purchased : Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month.

What was the average risk premium for long term bonds : Using the average US treasury Bill rate as a proxy rate, what was the average risk premium for Long term corporate bonds for the 7 year period.

Find what is the fergusons federal income taxes payable : Find what is the Fergusons' 2016 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable?

User Account

All Pages