Zonk Corp the Following Data Pertains to Zonk Corp

question 8

Multiple Choice

Zonk Corp. The following data pertains to Zonk Corp.,a manufacturer of ball bearings (dollar amounts in millions) :
Assume that Zonk is a potential leveraged buyout candidate.Assume that the buyer intends to put in place a capital structure that has 70 percent debt with a pretax borrowing cost of 14 percent and 30 percent common equity.Compute the revised equity beta for Zonk based on the new capital structure.

• A) 1.24
• B) 4.77
• C) 4.34
• D) 3.91

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