Question
Indell stock has a current market value of $150 million and a beta of 2.00. Indell currently has risk-free debt as well. The firm
Indell stock has a current market value of $150 million and a beta of 2.00. Indell currently has risk-free debt as well. The firm decides to change its capital structure by issuing $21.17 million in additional risk- free debt, and then using this $21.17 million plus another $16 million in cash to repurchase stock. With perfect capital markets, what will the beta of Indell stock be after this transaction?
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
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