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A firm is considering a change to its capital structure: Current debt = 250000 Current equity = 750000 current beta = 1.083 unlevered beta =
A firm is considering a change to its capital structure:
Current debt = 250000
Current equity = 750000
current beta = 1.083
unlevered beta = 0.866
risk free rate - 5.0%
Market risk premium = 6.0%
the firms tax rate = 25%
currently CAPM is 11.5%
what would the firms beta be if it increased its debt to 450,000?
A. 1.256
B. 0.939
C. 1.083
D. 1.245
E. 1.000
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