Suppose BetLev Inc. has a capital structure with 65 percent debt and 35 percent equity, a (levered)

Question:

Suppose BetLev Inc. has a capital structure with 65 percent debt and 35 percent equity, a (levered) beta of 1.3, and a corporate tax rate of 35 percent. Estimate the unlevered beta of BetLev.

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...