Qu1 D12 Coeden

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June 1, 2015 at 1:50 pm #251328
BrianH
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Hi sir

After the proposal, calculating Asset Beta, shouldn’t we use the new gearing structure? MVd $12.81m MVe $42.6m
Examiner has used the 50/50 pre proposal ratio?
June 1, 2015 at 4:09 pm #251367
John Moffat
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The current equity beta is 1.1, and to ungear it we use the current gearing (50:50).

When the answer continues to calculate the new equity beta and the new WACC, the new gearing is used.
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