Unleveraged beta

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• WACC / beta / required return

  Using the CAPM equation we can calculate the unleveraged beta Required return = Rf + (Rm-Rf) beta where Required return = unleveraged required return = 14.16% Rf = 6% rm = 12% b = unleveraged beta 14.16% = 6% + (12%-6%) beta beta = (14.16%-6%)

• BETA and WACC for Beckwith Engineering and Associates (BEA)

  BEA has a beta of 1.0. a. What is BEA's unleveraged Beta? Use market value when unlevering. b. What are BEA's new beta and cost of equity if the firm has 40% debt? c. What are BEA's WACC and total value of the firm with 40% debt?

• Using The Hamada Equation To Find Unlevered Beta

  This solution describes the Hamada equation and illustrates its use to convert levered (or leveraged) beta to unlevered (unleveraged) beta.

• Cost of capital, discount rate and true NPV

  The beta of unleveraged optical manufacturers is 1.2. Estimate the required return on Okefenokeeââ?¬â?¢s new venture.

• Okefenokee Real Estate Co: What is the required return on stock, cost of capital, and discount rate?

  The beta of unleveraged optical manufacturers is 1.2. Estimate the required return on Okefenokee's new venture.

• Required Rate of Return on Okefenokee Stock

  The beta of unleveraged optical manufacturers is 1.2. Estimate the required return on Okefenokee's new venture. a. Re=Rf+Beta*Risk premium=4%+1.5*6%=13% b. Cost of capital=Rd*D/(D+E)+Re*E/(D+E)=4%*4/(4+6)+13%*6/(4+6)=9.4% c.

• Ms. Macbeth - Capital Structure

  Suppose that the beta of the unleveraged stock was .6. What will B(A), B(E), and B(D) be after the change in capital structure? Please see the attached file for solution.

• Cyclone Software Co. is trying to establish its optimal capi

  Solution: Cost of Equity = Riskfree rate + (Market Risk Premium)(Leveraged Beta) 14 = 5% + (6%)(Beta leveraged at 25% Debt) Beta leveraged for 25% Debt = 1.5 Unleveraged Beta = (Leveraged Beta)/[1+(1-T)(D/E)] = 1.5/[1+(1-40%)(25%/75%)] =

• WACC with rebalancing

  272220 WACC with rebalancing A gourmet catering service has an unleveraged required return of r =43%. The company rebalances its capital structure each year to a target of L= 0.52. T * =0.20.