Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed...

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Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed...

Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed with 45% debt. What is Counts' unlevered beta? Do not round intermediate calculations. Round your answer to two decimal places.

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Answer 1

Answer #1

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Statement showing Computations

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Unlevered Beta = Levered Beta / 1 + ((1 - Tax Rate) x Debt/Equity)

Counts' unlevered beta = 1.55/(1+((1-.40)*.45/.55)

Counts' unlevered beta = 1.55/(1+((.60)*.8182)

Counts' unlevered beta = 1.55/(1.4909)

Counts' unlevered beta = 1.04

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Answer 2

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Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed...

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Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed...

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Counts Accounting has a beta of 1.55. The tax rate is 40%, and Counts is financed...