BetaCorp is a corporation that has two primary business lines personal hygiene and consumer off-the-shelf pharmaceuticals. We
Question:
BetaCorp is a corporation that has two primary business lines personal hygiene and consumer off-the-shelf pharmaceuticals. We are estimating its levered beta for the purpose of determining its cost of equity. The personal hygiene subsidiary is worth USD million while the consumer pharma subsidiary is worth USD million. The firm has a debttoequity ratio of Assume that the tax rate for all firms is The riskfree rate is and the market risk premium is The following information is for firms with comparable systematic risk: Comparable Firms Average Beta Average DE Ratio Personal Hygiene Medical
a Estimate the bottomup levered beta for Beta Corp.
b Estimate cost of equity
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts