Question
Information regarding Kroger Company, and four industry competitors is shown below, on December 12, 2007. Company Equity beta Interest-Bearing Debt Market value equity Kroger Company
| Information regarding Kroger Company, and four industry competitors is shown below, on December 12, 2007. | |||||
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| Company | Equity beta | Interest-Bearing Debt | Market value equity | |
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| Kroger Company | 1.05 | $ 6,674.0 | $ 17,690.8 |
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| Safeway Inc. | 0.49 | 5,897.9 | 15,236.3 |
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| Supervalu Inc. | 1.17 | 8,936.0 | 8,054.3 |
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| Whole Foods Markets | 1.16 | 760.9 | 5,762.1 |
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| Winn Dixie Stores Inc. | 2.56 | 160.1 | 916.8 | . |
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| a. | Estimate the industry asset beta, weighting each company by its proportion of total market value of equity. | ||||
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| b. | Relever the industry asset beta to reflect Kroger's capital structure, and to make another (industry-informed) estimate of Kroger's equity beta. | ||||
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
11th Edition
1259277178, 978-1259277177
