Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 30 million shares outstanding, as well as

image text in transcribed
Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 30 million shares outstanding, as well as $63 million in debt. The founder of HHI, Harry Harrison, made his fortune in the fast food business. He sold off part of his fast food empire, and purchased a professional hockey team. HHI's only assets are the hockey team, together with 50% of the outstanding shares of Harry's Hotdogs restaurant chain. Harry's Hotdogs (HDG) has a market capitalization of $828 million, and an enterprise value of $1.09 billion. After a little research, you find that the average asset beta of other fast food restaurant chains is 0.71. You also find that the debt of HHI and HDG is highly rated, and so you decide to estimate the beta of both firms' debt as zero. Finally, you do a regression analysis on HHI's historical stock returns in comparison to the S&P 500, and estimate an equity beta of 1.34. Given this information, estimate the beta of HHI's investment in the hockey team. HHI's asset beta is. (Round to two decimal places.) The hotdog equity beta is). (Round to two decimal places.) The value of hockey team is s million. (Round to one decimal place.) The beta of HHI's investment in the hockey team is . (Round to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

=+3. What are vicarious reinforcement and vicarious punishment?

Answered: 1 week ago

Question

1. Identify three communication approaches to identity.

Answered: 1 week ago

Question

d. Who are important leaders and heroes of the group?

Answered: 1 week ago

Question

3. Describe phases of minority identity development.

Answered: 1 week ago