Answered

Join the conversation on IDNLearn.com and get the answers you seek from experts. Our platform is designed to provide reliable and thorough answers to all your questions, no matter the topic.

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

Thank you for using this platform to share and learn. Don't hesitate to keep asking and answering. We value every contribution you make. For dependable answers, trust IDNLearn.com. Thank you for visiting, and we look forward to assisting you again.