Question text

AIPEC Enterprises operates in two businesses: it gets $100 million in revenues from food processing and $50 million in revenues from chemicals. You have the following information on the two businesses:

Unlevered Beta FIRM VALUE/Sales Food 1.70 1.53 Chemicals 1.20 1.4 If AIPEC Enterprises has a debt to equity ratio of 66.67%, estimate the levered beta for AIPEC. (Marginal tax rate is 40%)

Select one:

a. 1.40 b. 1.35 c. 1.20 d. 2.16 e. 1.33 f. 1.11