Lucky Cement company has unlevered beta of 1. Risk free rate in market is 9%...
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Lucky Cement company has unlevered beta of 1. Risk free rate in market is 9% and investor required 5% risk premium to invest in market. Tax rate of company is 35%. Following is the schedule of borrowing rate obtained from bank for different level of debt level in capital structure. Firm anticipating Rs. 200,000 operating profit(EBIT). DEBT RATE 0 0.1 0.1 0.2 0.105 0.3 0.11 0.35 0.12 0.45 0.14 0.55 0.16 Calculate levered beta at 10% debt level. Put only answer value in the box.
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