Business, 03.12.2019 20:31 acoverupoze5th

Beckman engineering and associates (bea) is considering a change in its capital structure bea currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 millions shares outstanding. bea is a zero growth firm and pays out all of its earnings as dividends. ebit is $14,933 millions, and bea faces a 40% debt, federal plus-rate-tax rate. the market risk premium is 4%, and the risk-free rate is 6%. bea is considering increasing its debt level to a capital structure with 40% debt, based on market values, and repurchasing shares with the extra money that it borrows. bea will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 9%. bea has a beta of 1.0.

a- what is bea's unlevered beta? use market value d/s when unlevering.
b- what are bea's new beta and cost of equity if it has 40% debt?
c- what are bea's wacc and total value of the firm with 40% debt? .

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 16:10

You are at a holiday dinner with your family. your relative makes the argument that the u.s. economy is resurgent and has recovered from the great recession of 2007 – 2009. economic growth, as measured by gdp, has been increasing from one quarter to the next. you beg to differ. how would you structure your argument with your relative? hint: you should think about two things, the accuracy of gdp measures, and whether gdp should be considered a comprehensive measure of a countries well-being.

Answers: 3

Answer

Business, 21.06.2019 20:30

Which of the following statements is correct? a) one drawback of forming a corporation is that it generally subjects the firm to additional regulationsb) one drawback of forming a corporation is that it subjects the firms investors to increased personal liabilitiesc) one drawback of forming a corporation is that it makes it more difficult for the firm to raise capitald) one advantage of forming a corporation is that it subjects the firm's investors to fewer taxese) one disadvantage of forming a corporation is that it is more difficult for the firm's investors to transfer their ownership interests

Answers: 1

Answer

Business, 22.06.2019 17:50

Which of the following is an element of inventory holding costs? a. material handling costs b. investment costs c. housing costs d. pilferage, scrap, and obsolescence e. all of the above are elements of inventory holding costs.

Answers: 1

Answer

Business, 22.06.2019 19:30

Which of the following occupations relate to a skill category of words and literacy

Answers: 1

Answer

You know the right answer?

Beckman engineering and associates (bea) is considering a change in its capital structure bea curren...

Questions