Indell stock has a current market value of $120 million and a beta of 1 50 Indell currently has risk free debt as well The firm decides to change its capital structure by issuing $30 million in additional risk free debt, and then using this $30 million plus another $10 million in cash to repurchase...

Indell increases its net debt by 40 million 30 million in new debt 10 mi ...

Indell stock has a current market value of $120 million and a beta of 1.50. Indell currently

Question:

Indell stock has a current market value of $120 million and a beta of 1.50. Indell currently has risk-free debt as well. The firm decides to change its by issuing $30 million in additional risk-free debt, and then using this $30 million plus another $10 million in cash to repurchase stock. With perfect capital markets, what will be the beta of Indell stock after this transaction?

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...