Accounting homework help

1. A firm has a levered beta of 1.60, and its debt to equity ratio is 2.0. What would the company be if it used no debt, i.e., what is its unlevered beta if the corporate tax rate is 20%?
2. There are two firms: Firm U and Firm L. Both firms have $100M total assets and $30M EBIT (earnings before interest and taxes). Firm U is an unleveraged firm without debt. Firm L is a leveraged firm with 50% of debt and 50% of common equity. The pre-tax cost of debt for Firm L is 10%. Both firms have 20% corporate tax rate. Calculate the return on equity (ROE) for the unleveraged firm U
Based on the information from Question 3. Calculate the return on equity (ROE) for the leveraged firm L

Solution:

15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.