ABC, Inc. has $20 million in debt outstanding at a cost of 8%. It also has 2
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Question:
ABC, Inc. has $20 million in debt outstanding at a cost of 8%. It also has 2 million shares outstanding with stock price is $15 per share. Its dividend payout ratio is 100%. The firm’s total (federal-plus-state) tax rate is 40%. ABC has a beta of 1.0. The market risk premium is 4%, and the risk-free rate is 6%. What is ABC’s unlevered beta? Use market value debt-to-equity ratio when unlevering.
Group of answer choices
0.870
0.714
0.833
0.769
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
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