The spreadsheet for this problem contains information about Kroger Company and four industry competitors in 2017. It

Question:

The spreadsheet for this problem contains information about Kroger Company and four industry competitors in 2017. It is available for download from McGraw-Hill's Connect or your course instructor (see the Preface for more information). Using this information:

Company	Equity beta	Interest-bearing debt	Market value equity
Sprouts Farmers Market	0.28	$385	$3,270
Supervalu Inc.	1.16	1,475	1,030
Weis Markets	0.58	65	1,410
Whole Foods Markets	0.54	1,051	11,110
Kroger Company	0.31	14,077	27,160

a. Estimate the industry asset beta, weighting each competitor by its proportion in the total market value of equity of all four competitors.

b. Relever the industry asset beta to reflect Kroger's capital structure to estimate an industry-based equity beta for Kroger.

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...