Viatris Company currently has a capital structure of 70 percent debt and 30 percent equity,...
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Viatris Company currently has a capital structure of 70 percent debt and 30 percent equity, but is considering a new product that will be produced and marketed by a separate division. The new division will have a capital structure of 68 percent debt and 32 percent equity. Viatris Company has a current beta of 2.4 , but is not sure what the beta for the new division will be. Block Company is a firm that produces a product similar to the product under consideration by Viatris Company. Block Company has a beta of 2.58 , a capital structure of 55 percent debt and 45 percent equity and a marginal tax rate of 35 percent. Viatris Company's tax rate is 28 percent. Estimate the levered beta for Viatris Company's new product division. 3.64 2.72 3.86 4.16
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