Question: please urgent fast 8. B&F Company operates in two lines of business: Beverage with an estimated value of $10 billion and Food with an estimated
8. B&F Company operates in two lines of business: Beverage with an estimated value of $10 billion and Food with an estimated value of $15 billion. Currently the firm has a D/E ratio of 1. Tax rate for the firm is 30% Assume the current risk free rate is 4% and the market risk premium is 6% (10 points) Line of business Average levered Beta 0.92 Average D/E ratio 30% Beverage Industry 45% Food Industry a. Calculate the Unlevered Beta for each line of business. (4 points) b. Calculate the Unlevered Beta for B&F Company, using the weights of each business line. (3 points) Calculate the Levered Beta for the B&F Company and then determine its Cost of Equity using CAPM. (3 points) www
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