Question
Suppose BetLev Inc. has a capital structure with 65% debt and 35% equity, a (levered) beta of 1.3, and a corporate tax rate of 35%.
Suppose BetLev Inc. has a capital structure with 65% debt and 35% equity, a (levered) beta of 1.3, and a corporate tax rate of 35%. Estimate the unlevered beta of BetLev.
Now supposed BetLev wishes to have a target capital structure of 50% debt and 50% equity. What will be its levered beta at the target capital structure?
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Fundamentals Of Futures And Options Markets
Authors: John C. Hull
4th Edition
0130176028, 9780130176028
