Find out the firm d equity beta

Assignment Help Basic Computer Science
Reference no: EM131056671

Firm D is an unlisted private firm. Hence, there are no stock return data to estimate the equity beta of the firm D. The firm D has the debt to equity (D/E) ratio of 0.7. The firm D's tax rate is 35%. And the average industry tax rate (t) is 35%

Assume there are only three other firms  (A, B and C) in the industry as shown below in the table. The table shows equity betas of the firms with the debt to equity ratios.

The firm D wants to use the information available from its industry to determine its equity beta. Find out the firm D's equity beta. (Hint: use unlever and re-lever procedures)

Company

Equity beta

D/E

A

1.5

1.2

B

1.4

1.1

C

0.9

0.7

a) greater than 1.15 

b) greater than 1.06 but less than 1.15 

c) less than 1.0 

d) greater than 1.0 but less than 1.06

Reference no: EM131056671

Questions Cloud

Appreciated or devalued against the mark : Assume that a bank has assets located in London worth £150 million on which it earns an average of 8 percent per year. The bank has £100 million in liabilities on which it pays an average of 6 percent per year. The current spot exchange rate is £1..
Write a program that creates a child process : demonstrate that the two processes alternately execute for 1 second of CPU time. (Note carefully the advice given in Section 35.3.2 about preventing a runaway realtime process from hogging the CPU.)
Formula for the variance of the prediction error : Battery failures. In five years, 500.000 batteries were put into service at a uniform rate. In that period, 5000 of them failed and were promptly replaced
What is the expected return of asset : a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset?
Find out the firm d equity beta : The firm D wants to use the information available from its industry to determine its equity beta. Find out the firm D's equity beta. (Hint: use unlever and re-lever procedures)
Describe the possible migration of ancient peoples : Describing the possible migration of ancient peoples; The influence that trade, agriculture, and tools had on movements; and How colonial actions and colonization impacted those among whom the colonists settled.
Performs the equivalent of pthread_once() : To keep the implementation simple, you can ignore possibilities such as init() failing or being canceled when first called from a thread (i.e., it is not necessary to devise a scheme whereby, if such an event occurs, the next thread that calls one..
Used by the executives and certain service personnel : LMC is considering purchase of a new company which may have the need to purchase an executive aircraft used by the executives and certain service personnel. The aircraft costs $1,475,000. LMC tax accountants estimate that the value of the aircraft wi..
Minutes on the viewing platform : On average, 30% of the tourists only visit Level 1 and return to the ground, while 70% visit both levels. On a typical day, the average tourist visiting Level 1 spends 15 minutes on the viewing platform, while the average tourist visiting Level 2..

Reviews

Write a Review

Basic Computer Science Questions & Answers

  What is social engineering

What is social engineering and How social engineering is performed?

  How many instructions can the processor execute

Assume that we are working on a workstation with an instruction rate of 500 MIPS. How many instructions can the processor execute between the receipt of each individual bit of the message?

  Design a class for representing a rectangular grid

Design a class for representing a rectangular grid and use it to allow a user to query a grid interactively as part of a game.

  Nist criteria for selection of des and aes relate to shannon

How do the NIST criteria for selection of DES and AES relate to Shannon's original standards of a good cryptographic system?

  Monitoring performance of it acquisition projects

Who is or should be responsible for monitoring the performance of IT acquisition projects and taking action that may result in cancelling the project?

  For the aside element create a style rule to

float the aside element on the right with a margin of 10 pixels; set the width to 50% of the width of the main section; and add a rounded border with a radius of 30 pixels. For paragraphs within the aside element, set the font size to 90% and the ..

  Names for a base class

What is a base class? And what are the other names for a base class? Should common functionality be put in the base class? Why or why not?

  Implement a simple automated bank registry system

Implement a simple automated bank registry system. The implementation will include several attributes related to a transaction, and the data will be managed in a global linked list within memory.

  What needs to be protected and from what to protect it

In order to successfully manage risk, one must understand risk itself and the assets at risks. The way one goes about managing risk will depend on what needs to be protected, and from what to protect it.

  Procedure to charge lower rate for ongoing support services

Create complete, written procedure for New Century Health Clinic maintenance change requests. Include suitable forms with procedure.

  Create a class to represent a triangle by storing

Create a class to represent a triangle by storing the lengths of its sides. Make the data members private and provide the typical get/set (accessor/mutator) routines associated with your data members.

  Additional web resources for telecommunication-network

You may search these questions or part of them on the web resource links available under "Additional Web Resources for Telecommunication & Network Security.pdf". If you do so, you must provide the reference to the resource as well as cite in your ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd