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An analyst gathers the following comp set consisting of Firm A and Firm B . Estimated debt beta for each firm equals 0 . 2
An analyst gathers the following comp set consisting of Firm A and Firm B
Estimated debt beta for each firm equals
Firm A: CAPM beta ; debttoequity ratio
Firm B: CAPM beta ; debttoequity ratio
All debt is perpetual, no new issuances or debt retirements are planned.
a Using the information to compute the industry unlevered beta.
bFind WACC for a similar firm C with debttoequity ratio of
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