Question
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 60% debt and has a levered beta of 1.6.
Premium for Financial Risk
Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 60% debt and has a levered beta of 1.6. If the risk free rate is 4.5% and the market risk premium is 4%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places.
%
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Principles Of Managerial Finance Brief
Authors: Chad J. Zutter, Scott B. Smart
8th Global Edition
1292267143, 978-1292267142
