Question
An all-equity company decides to recapitalize. The company has an unlevered beta of 1.2. If the company starts to borrow with 20% debt ratio, what
An all-equity company decides to recapitalize. The company has an unlevered beta of 1.2. If the company starts to borrow with 20% 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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Public Finance
Authors: Harvey Rosen, Robert Guell, Ted Gayer
9th Edition
0073511358, 9780073511351
