Question
ABC Inc. has an equity beta of 1.45 and a debt beta of 0.74. It's debt to equity ratio is 4/7 and the tax rate
ABC Inc. has an equity beta of 1.45 and a debt beta of 0.74. It's debt to equity ratio is 4/7 and the tax rate is 25%. CDC Inc. has the same asset beta as ABC Inc. If it finances its assets with 57% debt and its debt beta is 0.1 higher than ABC's debt beta, what is CDC's equity beta?
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Corporate Finance A Focused Approach
Authors: Michael C. Ehrhardt, Eugene F. Brigham
8th Edition
0357714636, 9780357714638
