Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the companys

Question:

Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the company’s beta. You have obtained the following equity betas for publicly traded firms that also manufacture home appliances.

($ millions) Market Value of Equity $2,740 Debt Firm Beta iRobot 0.99 7,310 Middleby's National Presto 2.10 732 0.12 739

a. Estimate an asset beta for Sinaloa Appliance.

b. What concerns, if any, would you have about using the betas of these firms to estimate Sinaloa Appliance’s asset beta?

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Analysis for Financial Management

ISBN: 978-1259918964

12th edition

Authors: Robert C. Higgins

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Question Posted: Feb 13, 2019 08:58 AM

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Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the companys

Question:

($ millions) Market Value of Equity $2,740 Debt Firm Beta iRobot 0.99 7,310 Middleby's National Presto 2.10 732 0.12 739 25,770 Newell Brands 1.16 11,893 Whirlpool 1.69 4,470 13,560

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a Following the approach described in Table 8A1 an average asset beta weighted by relative market va...View the full answer

Analysis for Financial Management

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