Chrysler, the automotive manufacturer, had a beta of 1.05 in 1995. It had $13 billion in debt

Question:

Chrysler, the automotive manufacturer, had a beta of 1.05 in 1995. It had $13 billion in debt outstanding in that year and 355 million shares trading at $50 per share. The firm had a cash balance of $8 billion at the end of 1995. The marginal tax rate was 36%.
a. Estimate the unlevered beta of the firm.
b. Estimate the effect of paying out a special of $5 billion on this unlevered beta.
c. Estimate the beta for Chrysler after the special Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...