Question
39.Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 7.2% yield to maturity. The
39.Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 7.2% yield to maturity. The risk-free rate (rRF) is 4.6%, and the market risk premium (rM- rRF) is 6.7%. Using the CAPM, Bloom estimates that its cost of equity is currently 11.2%. The company has a 23% tax rate.
What would Bloom's beta be if the company had no debt in its capital structure? (That is, what is Bloom's unlevered beta, bU?). Answer question with accuracy. 4 decimal places.
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Thomas Calculus Early Transcendentals
Authors: Joel R Hass, Christopher E Heil, Maurice D Weir
13th Edition
978-0321884077, 0321884078
