You are trying to determine the equity beta () of a privately held company, Summa Corporation, that
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You are trying to determine the equity beta (β) of a privately held company, Summa Corporation, that is not required to publish its financial information. The average asset beta from a group of comparable companies is 1.28. If Summa Corp has a debt/equity ratio of 30% and the tax rate is 35% what is its equity beta (β)? Why do we use asset betas for comparable companies rather than equity betas? What is the appropriate method to determine comparable companies? What are the risks involved?
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Fundamentals of biochemistry Life at the Molecular Level
ISBN: 978-0470547847
4th edition
Authors: Donald Voet, Judith G. Voet, Charlotte W. Pratt
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