Zolar Corp

question 30

Multiple Choice

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

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

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