We run a delivery service, and we believe our firm has market risk equally between that...
We run a delivery service, and we believe our firm has market risk equally between that of UPS and FedEx. We know the following about these 2 firms:
|
Stock Price per share |
# shares outstanding |
Market Value of Debt |
|
|
UPS |
$65 |
0.7 billion |
$ 5 billion |
|
FedEx |
$55 |
250 million |
$ 3 billion |
We also have the following data on the securities of these firms:
|
Beta E |
Beta D |
|
|
UPS |
0.8 |
0 |
|
FedEx |
1.1 |
0.1 |
Assume that our firm has risk-free debt with market value $20 million and equity with market value $450 million. Assume that taxes are not relevant. Please estimate our firm’s equity beta.
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