Question
Michigan, Inc. current capital structure: D = $20,000 E = $180,000 Their current levered B L = 1.25, Taxes = 30% Michigan plans to change
Michigan, Inc. current capital structure: D = $20,000 E = $180,000
Their current levered BL = 1.25, Taxes = 30%
Michigan plans to change their capital structure to: D = $40,000 and E = $160,000
What would be the new levered beta?
U = L [1 + (1 T) x (D/E)
L = U X [1 + (1 T) x (D/E)]
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Financial Modeling
Authors: Simon Benninga, Tal Mofkadi
5th Edition
0262046423, 9780253337825
