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How much is the beta for our target firm

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Reference no: EM132918578

Problem 1: EasyCloud Co. has 40 million shares outstanding, currently trading at $1 per share, this Co. has $20 million debts from their corporate bond. Assume you want to calculate the cost of equity which requires beta of this company. You plan to use an industry average beta taken from other comparable firms, which is 1.5, based on an industry average debt to asset ratio of 40% within the same industry. Calculate how much is the beta for our target firm, assuming tax rate is 35%.

Reference no: EM132918578

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