Question
An analyst gathered the following information about a private company and its publicly traded competitor: Comparable Companies Tax Rate (%) Debt/Equity Equity Beta Private Company
An analyst gathered the following information about a private company and its publicly traded competitor:
| Comparable Companies | Tax Rate (%) | Debt/Equity | Equity Beta |
| Private Company | 30.0 | 1.00 | N.A |
| Public Company | 35.0 | 0.90 | 1.75 |
Using the pure-play method, the estimated equity beta for the private company is closest to:
| A. | 1.029. | |
| B. | 1.104. | |
| C. | 1.877. | |
| D. | 1.973. |
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Fundamentals Of Financial Management
Authors: James C. Van Horne
10th Edition
0138596875, 978-0138596873
