BA350 Financial Management: 16-3 Ethier Enterprise has an unlevered beta

BA350 Financial Management

16-3 Premium for Financial Risk
Ethier Enterprise has an unlevered beta of 1.0. Ethier is financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the market risk premium is 6%. How much is the additional premium that Ethier’s shareholders require to be compensated for financial risk?
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