Question
A firm has a beta 0f 1.45 and a D/E ratio of .45. Their effective tax rate is 23%. They are exploring a new debt
A firm has a beta 0f 1.45 and a D/E ratio of .45. Their effective tax rate is 23%. They are exploring a new debt raise and stock repurchase that would modify their capital structure significantly. Their new proposed D/E ratio would be .65. What would be their new beta?
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To calculate the new beta of the firm we need to use the formula for lever...
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Advanced Accounting
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
11th edition
538480289, 978-0538480284
