Answered

Discover a wealth of knowledge at Westonci.ca, where experts provide answers to your most pressing questions. Experience the ease of finding reliable answers to your questions from a vast community of knowledgeable experts. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

HNT is an all-equity firm with a beta of .88. What will the firm's equity beta be if the firm switches to a debt-equity ratio of .35

Sagot :

Answer:

the firm equity beta is 1.188

Explanation:

The computation of the firm equity beta is as follows:

In the case when the firm switches to a debt-equity ratio is 0.35,

So, the proportion of equity in total capital structure is

= 100 ÷ 135

= 0.741

Now The equity beta is

=  0.88 ÷ 0.741

= 1.188

Hence, the firm equity beta is 1.188

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.