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Enterprise Unlevered and Levered Beta

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Ethier Enterprise has an unlevered beta of 1.0. Ethier is financed with 50% debt and has a levered beta of 1.6. If the risk free rate is 5.5% and the market risk premium is 6 %, how much is the additional premium that Either's shareholder require to be compensated for finanical risk?

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Solution Summary

The solution discusses enterprise unlevered and levered beta.

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  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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