Finance-RJR Nabisco is considering spinning off its Food Division.

| January 30, 2017

Question
RJR Nabisco is considering spinning off its Food Division. The average beta of comparable traded firms is 0.95. The average Debt-Equity ratio is 35%. The division is expected to have a Debt ratio of 25%. The marginal corporate tax rate is 36%. Estimate the beta for the division by obtaining the beta of comparable traded firms.

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