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Gepla Software is a steel company with 100 million shares trading at $25/share and $250 million in debt. You have run a regression of the
Gepla Software is a steel company with 100 million shares trading at $25/share and $250 million in debt. You have run a regression of the firms stock returns against a market index using the last 5 years of data and have estimated a beta of 1.06. If the regression beta is right, the average debt to equity ratio for the company over the last 5 years was 10% and the marginal tax rate is 40%, estimate the beta for the equity, given its current financial leverage.
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