Question
Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 35% debt and has a levered beta of 1.6. If the risk free
Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 35% debt and has a levered beta of 1.6. If the risk free rate is 5% and the market risk premium is 7%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places.
%
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Corporate Finance A Focused Approach
Authors: Michael C. Ehrhardt, Eugene F. Brigham
4th Edition
1439078084, 978-1439078082
