Paper Industry Capital Structure and B Coefficients as of December 2002 (Million US$ except as noted) Levered Market Net Beta! Equity? Debt? Abitibi-Consolidated 1.14 4,374 5,770 Bowater Inc. 0.70 1,928 2,278 Domtar Inc.4 0.95 3,356 2,655 International Paper Co. 0.87 16,931 11,823 Meadwestvaco Corp. 0.99 4,186 4,809 Packaging Corp. of America 0.35 1,874 688 Pope & Talbot, Inc. 0.70 186 226 Temple-Inland Inc. 0.93 2,149 1,772 Weyerhaeuser Co. 1.06 10,070 14,041 Regression of company returns on S&P 500 returns, unadjusted. 2Shares outstanding times share price. ?Book interest bearing debt minus cash and marketable securities. 4 Canadian dollars Sources: Companies' 10-Ks and 10-Qs and Deutsche Bank Securities. 38 The previous exhibit contains estimations of B coefficients, market capitalization, and net debt for a number of paper companies. a. Adjust their estimated betas for regression toward the mean (see Section 3.3) and estimate the average unlevered B coefficients. b. Update the data to the present and compute the average unlevered B coefficient. 3.9 Verify the estimation of AdvPak cost of equity made in Section 3.7. Do it step by step starting from the levered B coefficients of the comparable companies