Question

a.) Find the levered beta for this company that has three segments. The company has 800 in market value of debt, no cash, and tax rate of 36%. The company is trading at a fair price (relative to its EV).

	Unlevered Beta	Revenue	EV/Sales
Coal Power	0.87	2300	2
Wind Power	1.52	1800	3
Sun Power	1.36	1430	4

b.) If the company sells its coal power division for its fair value (EV) and keeps the cash what is the overall company's new levered beta after this transaction?

a.

a) 0.82; b) 0.64

b.

a) 1.32; b) 1.05

c.

a) 2.20; b) 1.95

d.

a) 1.87; b) 1.43

Answer 1