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An analyst gathered the following information about a private company and its publicly traded competitor: Comparable Companies Debt/Equity Equity Beta Private Company 1.00 N.A Public
An analyst gathered the following information about a private company and its publicly traded competitor:
Comparable Companies | Debt/Equity | Equity Beta | |
Private Company | 1.00 | N.A | |
Public Company | 0.90 | 1.75 |
Using the pure-play method, what is the estimated equity beta for the private company? Use Formulae Ba = E/V x Be where V is enterprise value; E = D+E (where D is market value of debt)
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