Calculate the firm\'s unlevered beta using the information below $250,000 $750,0

Question

Calculate the firm's unlevered beta using the information below $250,000 $750,000 $450,000 1.0550 11.00% 5.00% 6.00% 25.00% current debt current equity new debt level current B Kmi MRP Tax rate = Select one: a. 0.8440 b: 1.3246 c. 0.7913 d. 1.0000 ak corp, recenty reported $18,350 of sales, $9,900 of operating costs other than depreciation and $1 250 of d company had no ar epreciati charges. it had $4,500 of outstanding bonds that carry a 10.0% interest rate, and its federal-plu to buy new tixed assets

Explanation / Answer

Beta = 1.0550, Debt = 250000, Equity = 750,000
Unlevered Beta = Beta Leverd /(1 + ( 1-Tax )*( Debt/Equity)) = 1.0550/( 1 + ( 1 -25%)*250,000/750,000)
= 0.8440
Option a is the Correct Option

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