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  "documentTitle": "Bear Stearns | Investment Banking Pitch Book | 36 slides",
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  "notes": "Bear Stearns DCF Primer slide detailing the Hamada equation application.",
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      "kind": "list",
      "text": "If the subject company's beta is being used, it can be unlevered and relevered with an industry average capital structure if its current capital structure departs significantly from the industry average.",
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      "text": "The capital structure assumption used to relever the subject company's beta should be the same as that used to determine the subject company's WACC.",
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      "text": "The formula for levering an unlevered beta is as follows:",
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      "text": "The impact of a unique capital structure on a company's beta may be neutralized by unlevering its beta and relevering to the industry average or current capital structure.",
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      "text": "βL = βU * [1 + D/E * (1 - T)]\nβU = βL / [1 + D/E * (1 - T)]",
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      "text": "(1) Include the value of preferred stock and minority interest in the value of debt for purposes of unlevering/relevering beta, but do not tax-effect. (2) Market value of equity should include all in-the-money net options and all other in-the-money common stock equivalents.",
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      "text": "βL = levered beta. βU = unlevered beta. D = market value of debt. E = market value of equity. T = marginal corporate tax rate.",
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      "text": "Levering and Unlevering Equity Betas",
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