Sinaloa Appliance, Inc., a private firm that manufactures home appliances,

Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the company’s beta. You have obtained the following equity betas for publicly traded firms that also manufacture home appliances.

($ millions) Market Value of Equity $2,740 Debt Firm Beta iRobot 0.99 7,310 Middleby's National Presto 2.10 732 0.12 739


a. Estimate an asset beta for Sinaloa Appliance.

b. What concerns, if any, would you have about using the betas of these firms to estimate Sinaloa Appliance’s asset beta?

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