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The asset beta regearing formula
Equity beta = asset beta ( ve+vd1-t,)/ve ??? Why it’s other way
The numerator is ve / ve plus vd 1-t ????? Which one is regearing asset beta formula?? Please confirm
And also regearing combined asset beta for combined company ..
Geared beta for combined company ..please can u confirm the formula ..I m confused about numerator and denominator?
Beta Asset = business risk. Formula on exam sheet is in terms of Beta Asset. I.e. ungearing. Ba=Be x E/E+D(1-t). If you want to regear, then you are looking for Be. Be = Ba x E +D(1-t)/E
Thank u Patrick
And for combined geared beta it is
Combined geared beta= combined asset beta ( ve/ ve+ vd(1-t) ?? Correct or it should be inverse ..please confirm the numerator n denominator here
What you have written is correct for getting the combined equity beta (i.e. geared beta).
(Patrick: Please do not answer in this forum – it is the Ask the Tutor Forum and you are not the tutor. Your answer to this question (and to one of the others) is correct, but you answer on dealing with tax allowable depreciation was wrong and so I deleted it and gave the correct answer)
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