MidlandÔÇÖs division WACC

92 1255618701093 midland energy unlevered equity beta

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Unformatted text preview: Midland Energy unlevered equity beta = 0.92 = (12556/18701)*0.93+ Midland Energy unlevered equity beta = 0.92 = (12556/18701)*0.93+ (4047/18701)*1.05+ Petrochemicals beta (2097/18701) (4047/18701)*1.05+ Petrochemicals beta (2097/18701) Petrochemicals unlevered equity beta*(2097/18701) = 0.92 –– Petrochemicals unlevered equity beta*(2097/18701) = 0.92 (12556/18701)*0.93 ––(4047/18701)*1.05 = 0.61 (12556/18701)*0.93 (4047/18701)*1.05 = 0.61 Pertochemicals levered equity beta = 0.61(1+ 0.64*0.667)=0.85 Pertochemicals levered equity beta = 0.61(1+ 0.64*0.667)=0.85 Question 5: Calculation of WACCs for Midland’s divisions Midland’s Why do the WACCs differ across divisions?...
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