Question
First Responder Inc. has a debt-to-equity ratio of 1.0, and its beta (leveraged) is 1.2. First Responder Inc. is willing to change its target capital
First Responder Inc. has a debt-to-equity ratio of 1.0, and its beta (leveraged) is 1.2. First Responder Inc. is willing to change its target capital structure to a debt-to-equity ratio of 0. What is its new beta (corporate tax rate is 40%)?
Here is the answer provided:
Formula: = [ + ( )(/)]
=> . = [ + ( . )(. )]
=> = . + ( . )(. ) = . 5
How did they get the D/E ratio of (1.0) if the question asks for a (debt-to-equity) ratio of 0?
Can you please explain each step?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Tor Accessing The Deep Web And Dark Web With Tor How To Set Up Tor Stay Anonymous Online Avoid Nsa Spying And Access The Deep Web And Dark Web
Authors: Jack Jones
1st Edition
1545269920, 978-1545269923
