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Boswal Inc. is a manufacturing company. Its shares do not trade publicly, so it has decided to calculate the average beta of a group of
Boswal Inc. is a manufacturing company. Its shares do not trade publicly, so it has decided to calculate the average beta of a group of public companies in the industry. The following data was collected:
Firm Beta DebttoEquity
River Crossing
Atlas Manufacturing
Innovative Technologies
Hanson Brothers
West Coast Fabrication
Average
Boswal has a debt ratio of The industry has an average tax rate of
REQUIRED:
Estimate a leverageadjusted beta for Boswal Company.
What proportion of its leveraged beta is due to business risk and financial risk?
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