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Hi - i need help with the question attached. please let me know if you need anything else. Question You need to estimate the equity
Hi - i need help with the question attached. please let me know if you need anything else.
Question You need to estimate the equity beta for Golden Clothiers, Inc. Golden's debt-to-equity ratio is 85%, and its debt beta is 0.25. The following table shows the betas, debt betas and debt-to-equity ratios for three comparable clothing retailers (all taken from finance.yahoo.com). Assume the tax rate is 30% for all four firms. Please show your work and clearly label your answers. Company Beta D/E Ratio Debt Beta TJ Maxx 1.68 0.25 0.3 New York & Co 2.14 0.16 0.3 Express, Inc 1.23 0.28 0.3 a. Assuming debt is risk-free, use the information given above to estimate the unlevered equity betas of each of these companies. b. Assuming debt is risk-free, what is your estimate of Golden Clothiers levered equity beta? c. The current risk-free rate is 1.8% and the current return on the market is 9.3%. If Golden's before-tax cost of debt is 5.42% and it has no preferred stock in its capital structure, what is Golden's weighted average cost of capitalStep by Step Solution
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