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Estimate the unlevered beta of the firm

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Question - You would like to estimate the unlevered beta of Schwartz Industries (SI). SI's value of outstanding equity is $400.00 million, and you have estimated its beta to be 1.20. SI has four-year zero-coupon debt outstanding with a face value of $100.00 million, which currently trades for $75.00 million. SI will pay no dividends and will reinvest all of its earnings over the next four years. The four-year risk-free interest rate is 5.130%. Use the Black-Scholes formula to estimate the unlevered beta of the firm.

Reference no: EM132962643

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