You would like to estimate the beta of a private company, Financial Management

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You would like to estimate the beta of a private company

You would like to estimate the beta of a private company that manufactures home appliances. You have collected the following information about similar companies:

Equity Beta Debt MV Equity

Black&Decker 1.40 $2500 $3000

Fedders 1.20 $5 $200

Maytag 1.20 $540 $2250

The private company and the publicly traded companies all have a tax rate of 40. The private company has a debt/equity ratio of .25.

Estimate the asset beta and equity beta for the private firm.

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