Reading 37 Cost of Capital, example 13, page 68-69
Please explain me the Beta calculation. I got the beta .96, d/d+e .1, after this, I am unable to any beta calculation.
Sorry, I cant post the question, as it is quite long.
Not sure if there’s an easier way but…
Find various values for Equity using D/(D+E) = x assuming D=1 and you get
0.1, E=9
0.2, E=4
…
then just sub into Beta = Beta unlevered * (1 + [1 - t] * D/E )
i.e. 0.96 = 0.9* (1+ [1-0.36] * 1/9)
Ohh well…this works.