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You would like to estimate the beta of a private company that manufactures home appliances. You have collected the following information about similar companies:
Equity Beta Debt MV Equity
Black&Decker 1.40 $2500 $3000
Fedders 1.20 $5 $200
Maytag 1.20 $540 $2250
The private company and the publicly traded companies all have a tax rate of 40. The private company has a debt/equity ratio of .25.
Estimate the asset beta and equity beta for the private firm.
It cost a local store $2.4 per unit annually for inventory. Sales this year are anticipated to be 632 units. Each order costs $21. The company is using Economic Order Quantity model in placing the orders. Calculate the economic order quantity
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The existence of market imperfection result in an optimal capital structure with- All debt, all equity, All equity and debt.
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A $1,000, 7% annual coupon bond matures in three years. The bond is currently priced at $974.23 and has a YTM of 8.0%. What is the Macaulay duration? Jiminy's Cricket Farm issued a 30-year, 7 percent semiannual bond 9 years ago. The bond currently se..
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