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I want to please postpone the solution steps quickly Q1. You are trying to estimate a beta for Delta Trucking. The regression beta over the

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I want to please postpone the solution steps quickly

Q1. You are trying to estimate a beta for Delta Trucking. The regression beta over the last 5 years is 0.848, but the firm operated just in the trucking business and had an average debt to equity ratio of 10% over the period. The stock price is currently s 10 per share and there are 35 million shares outstanding, and the current market value of debt is $ 50 million. Delta is planning on borrowing $ 150 million and using $ 100 million to buy InfoPad Software, a small software firm with no debt and a beta of 1.30. It is also planning on using the remaining $ 50 million to pay a dividend to its stockholders. (Tax rate is 40%) a. Estimate the unlevered beta for Delta Trucking, based upon the regression beta and the average debt to equity ratio over the last 5 years. b. Estimate the new unlevered beta for Delta, if it acquires InfoPad Software. c. Estimate a new levered beta for Delta assuming that it goes through with its plan to buy InfoPad and buy back stock

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