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An all-equity company decides to recapitalize. The company has an unlevered beta of 1.5. If the company starts to borrow with 30% debt ratio, what

An all-equity company decides to recapitalize. The company has an unlevered beta of 1.5.

If the company starts to borrow with 30% debt ratio, what will be the levered beta using Hamadas equation if the tax rate = 40%?

Why is the levered beta higher than the unlevered beta?

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