You are analyzing the beta for HP and have broken down the business of The company...
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You are analyzing the beta for HP and have broken down the business of The company into four divisions. The company has $1 billion in debt, and it is Allocated to the divisions in the same proportion as their market values. The tax Rate is 36%. The market values and unlevered betas for the four divisions are: Market value of equity $2 billion $2 billion $1 billion $3 billion Division Mainframes PCs Software Printers Beta 1.1 1.5 2.0 1.0 a. Estimate the unlevered and levered beta for HP. b. What is the assumption you have made about the debt beta and Hence riskiness of the debt in answering (a)? You are analyzing the beta for HP and have broken down the business of The company into four divisions. The company has $1 billion in debt, and it is Allocated to the divisions in the same proportion as their market values. The tax Rate is 36%. The market values and unlevered betas for the four divisions are: Market value of equity $2 billion $2 billion $1 billion $3 billion Division Mainframes PCs Software Printers Beta 1.1 1.5 2.0 1.0 a. Estimate the unlevered and levered beta for HP. b. What is the assumption you have made about the debt beta and Hence riskiness of the debt in answering (a)?
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Total Market Value of Equity is 2 2 1 3 8 Unlevered beta of HP can be calculate... View the full answer
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