Beta for project based on the comparable companies

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Reference no: EM132029380

Dorman Industries has a new project available that requires an initial investment of $4.3 million. The company will finance the project with a debt-to-value ratio of .40. The companies with operations comparable to this project have unlevered betas of 1.15, 1.08, 1.30, and 1.25. The risk-free rate is 3.8 percent, and the market risk premium is 7 percent. The company has a tax rate of 34 percent. Please estimate the beta for the project based on the comparable companies and the debt ratio associated with the project. please teach me step by step.

Reference no: EM132029380

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