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An analyst gathers the following information for Firm A and Firm B. Using the information to compute the industry unlevered beta, what is the appropriate

An analyst gathers the following information for Firm A and Firm B. Using the information to compute the industry unlevered beta, what is the appropriate beta for each company for use in the WACC? (Assume that the debt beta for each firm equals zero.)

Firm A: CAPM beta = 0.9; debt-to-equity ratio = 0.4

Firm B: CAPM beta = 1.2; debt-to-equity ratio = 2

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