medium · Principles of Finance cost-of-capital-structure
An analyst is evaluating a private firm and uses a public peer as a proxy. The peer has a levered beta of 1.10, a debt-to-equity ratio of 0.25, and a tax rate of 30%.
If the private firm intends to operate with a debt-to-equity ratio of 1.00 at a 30% tax rate, what is the appropriate levered beta for the private firm?
- 1.76
- 1.87
- 1.10
- 1.59
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