Question
Much has been changing in FLIR and they no longer believe their beta is representative of their firm. Instead, they've compiled information on similar firms
Much has been changing in FLIR and they no longer believe their beta is representative of their firm. Instead, they've compiled information on similar firms and desire to get a better estimate of a relevant beta to use for project analysis. Although they believe their beta isn't good, they do believe their current debt structure is representative of their target weights.
Information regarding FLIR and peer industry competitors is shown below.
| Company | Equity beta | Interest-Bearing Debt | Market value equity |
| FLIR | 1.75 | $ 676 | $ 6,779 |
| Lockheed Martin | 0.94 | $ 19,654 | 97,961.0 |
| Parrot | 1.35 | $ 30,662 | 113,878.0 |
Estimate the beta that FLIR should use in its project analysis. Show EACH step to arrive at your solution.
Bfirm =
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
8th edition
978-1259569197
