North Pole Fishing Equipment plc and South Pole Fishing Equipment plc would have identical equity betas of 1.16 if both were all-equity financed. The market value information for each company is shown here:
North Pole South Pole
Debt £ 1,430,000 £ 2,620,000
Equity £ 2,580,000 £ 1,400,000
The expected return on the market portfolio is 11.7 per cent, and the risk-free rate is 6.1 per cent. Both companies are subject to a corporate tax rate of 27 per cent. Assume the beta of debt is zero.
Requirement 1:
What is the equity beta of each of the two companies? (Round your answers to 2 decimal places (e.g., 32.16).)
Equity beta
North Pole ?
South Pole ?