Question
Melody Ranch is considering opening a farm-to-table restaurant along-side its cattle operations. The beta currently for Melody Ranch is 2.3, and it is currently 80%
Melody Ranch is considering opening a farm-to-table restaurant along-side its cattle operations. The beta currently for Melody Ranch is 2.3, and it is currently 80% Equity financed, and has a marginal tax rate of 25%. There are three other pure play farm-to-table restaurants in the Jackson Hole area that also all have a marginal tax rate of 26%. What is the beta Melody Ranch should use to calculate the return to shareholders for this restaurant project? Where OutdoorsBanq has a beta of 1.3 and (D/E) of 1.4; Roots has a beta of 2.2 and (D/E) of 1.8; and Blue Sky has a beta of 1.6 and (D/E) of 0.5.
Question 21 options:
| A) Beta = 1.089 |
| B) Beta = 2.3 |
| C) Beta = 0.89 |
| D) Beta = 3.221 |
| E) Beta = 1.7 |
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