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North Pole Fishing Equipment Corporation and South Pole Fishing Equipment Corporation would have identical equity betas of 1 . 0 5 if both were all
North Pole Fishing Equipment Corporation and South Pole Fishing Equipment
Corporation would have identical equity betas of if both were allequity financed.
The market value information for each company is shown here:
The expected return on the market portfolio is percent and the riskfree rate is
percent. Both companies are subject to a corporate tax rate of percent. Assume the
beta of debt is zero.
a What is the equity beta of each company? Do not round intermediate calculations
and round your answers to decimal places, eg
b What is the required rate of return on equity for each company? Do not round
intermediate calculations and enter your answers as a percent rounded to
decimal places, eg
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