100) The required return on equity for an all-equity firm is 10.0 percent. They currently have a beta of one and the risk-free rate is 5 percent and the market risk premium is 5 percent. They are considering a change in capital structure to a debt-to-equity ratio of 1/2, the tax rate is 40 percent, the pre-tax cost of debt is 8 percent. Find the beta if this firm changes capital structure. A) 1.12 percent B) 1 percent C) 7.4 percent D) none of the options Answer: B Topic: The Financial Structure of Subsidiaries Accessibility: Keyboard Navigation