Bailey and Sons has a levered beta of 1.10, its capital structure consists of 40%...
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Finance
Bailey and Sons has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 25%. What would Bailey's beta be if it used no debt, i.e., what is its unlevered beta?
0.64, 0.67, 0.69, 0.71, 0.73
Serendipity Inc. is re-evaluating its debt level. Its current capital structure consists of 80% debt and 20% common equity, its beta is 1.60, and its tax rate is 25%. However, the CFO thinks the company has too much debt, and he is considering moving to a capital structure with 40% debt and 60% equity. The risk-free rate is 5.0% and the market risk premium is 6.0%. What's the firm's new cost of equity under 40% debt?
7.5%, 7.8%, 8.1%, 8.3%, 8.6%
Laramie Trucking raised $300 million in new debt and used this to buy back stock. After the recap, Laramies stock price is $9. If Laramie had 60 million shares of stock before the recap, how many shares does it have after the recap?
25.56 million shares
26.67 million shares
27.78 million shares
28.12 million shares
28.77 million shares
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