1. You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources,
you find that Lauryn has a reported equity beta of 1.4, a debt-to-equity ratio of .3, and a tax rate of
30 percent. Based on this information, what is Lauryn’s asset beta?
1.4 = BAsset x (1 + .3(1-.30))
BAsset = 1.16