Calculate the unlevered asset betas for each of the three comparable firms being sure to adjust appropriately for their respective marginal tax rates. Betas: Burger doodle: .56 Southern Frier: .79 Buffet Pizza: .71 Calculate the arithmetic industry average of the three asset betas Please answer #2

Calculate the unlevered asset betas for each of the three comparable firms being sure to adjust appropriately for their respective marginal tax rates. Betas: Burger doodle: .56 Southern Frier: .79 Buffet Pizza: .71 Calculate the arithmetic industry average of the three asset betas Please answer #2

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 87E: Cost of Debt Financing Stinson Corporations cost of debt financing is 6%. Its tax rate is 30%....

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Question

Calculate the unlevered asset betas for each of the three comparable firms being sure to adjust appropriately for their respective marginal tax rates.

Betas:
Burger doodle: .56
Southern Frier: .79
Buffet Pizza: .71
Calculate the arithmetic industry average of the three asset betas

Please answer #2

Debt
Levered Equity
Marginal Revenues ($
Tax Rate Mill)
Соmpany Naте
Ratio
Beta
Parent Company
60%
0.95
40%
Greens to Go
65%
??
40%
Burger Doodle
35%
0.75
35%
1.95
Southern Fried Taco
45%
1.25
30%
2.85
Buffet Pizza Company
40%
1.05
27%
0.75

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