Question
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.3. Ethier is financed with 40% debt and has a levered beta of 1.7.
Premium for Financial Risk
Ethier Enterprise has an unlevered beta of 1.3. Ethier is financed with 40% debt and has a levered beta of 1.7. If the risk free rate is 4% and the market risk premium is 6%, 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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Accounting
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie
11th Edition
9780730382737, 9780730382737
