you are evaluating a new project and need an estimate for your
project's beta. You have...
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Accounting
you are evaluating a new project and need an estimate for yourproject's beta. You have identified the following information aboutthree firms with comparable projects.
Firm Name
Equity Beta
Debt Beta
Debt to equity ratio
Lincoln
1.25
0
0.25
Blinkin
1.6
0.2
1
Nod
2.3
0.3
1.5
The unlevered beta for Nod is closest to :
A.1.00
B.0.90
C.0.95
D.1.10
Answer & Explanation
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A B C D E F G H I 2 3 Firm Name Equity Beta Debt Beta Debt to equity ratio 4 Lincoln 125 0 025 5 Blinkin 16 02 1 6 Nod 23 03 15 7 8 Asset Unlevered beta for each firm can be calculated using following formula 9 Asset Unlevered beta EWEDWD 10 Where 11 E is the equity beta 12 D is the debt beta 13 WE 11 DE is the weight of equity 14 WD is
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