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A firm has a debt / equity ratio of 0 . 5 0 and a tax rate of 4 0 . 0 percent. Its equity

A firm has a debt/equity ratio of 0.50 and a tax rate of 40.0 percent. Its equity beta is 1.40, while its asset (unlevered) beta is 1.07692. Given a risk-free rate of 2.0 percent and an expected return on the market of 7 percent, the equity has a required rate of return of 9.00 percent. As you can calculate, 2.0%9.00%=22.22% of the investors' required rate of return comes from the risk-free rate (compensates the investor for the time value of money). As shown in this course, the investor is also compensated for business risk and financial risk. Given this information, determine what percentage of the investors' total required rate of return is compensation for business risk.
Enter your answer is decimal format, truncated to three decimal places. For example, if your answer is 46.56%, enter "0.465".
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