Question
Tenix is a pharmaceutical company with a beta of 1.2 and a D/E ratio of 0.25. Tenix is considering an investment in the healthcare services
Tenix is a pharmaceutical company with a beta of 1.2 and a D/E ratio of 0.25. Tenix is considering an investment in the healthcare services industry. If all firms have a marginal tax rate of 40% and Tenix plans to operate this investment at it's current D/E ratio, what is the correct beta to apply to the investment?
Industry Median Beta Median D/(D+E) Median Cash/Value Healthcare 0.94 0.36 0.06
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Intermediate Accounting principles and analysis
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
2nd Edition
471737933, 978-0471737933
