Question
ABC is financed with debt and the rest equity. ABC has an equity beta of , a debt beta of 0 and a marginal tax
ABC is financed with debt and the rest equity. ABC has an equity beta of , a debt beta of 0 and a marginal tax rate of . If ABC issues debt to repurchase equity so that the new firm is now % debt, what will be its new equity beta? (Continue to assume the debt beta remains at 0.) Ans is 2.25 but i do not know how to calculate
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
