1. Boris Duarte, covers initial public offerings for Zellweger Analytics, an independent research firm specializing in global small-cap equities. He has been asked to evaluate the upcoming new issue of TagOn, a US-based business intelligence software company. The industry has grown at 26% per year for the previous three years. Large companies dominate the market, but sizable comparable companies, such as Relevant Ltd., ABJ Inc., and Opus Software Pvt. Ltd., also compete. Each of these competitors is domiciled in a different country, but they all have shares of stock that trade on the US NASDAQ. The debt ratio of the industry has risen slightly in recent years. D/E of TagOn is 0.01 & Tax Rate is 23%. What is the average asset beta for comparable players in this industry (Relevant, ABJ, and Opus) weighted by market value of equity? Based on the average, what is TagOns Equity/Levered Beta?

\begin{tabular}{lcccccc} \hline & SalesinMillions($) & MarketValueEquityinMillions($) & MarketValueDebtinMillions($) & EquityBeta & TaxRate(%) & SharePrice($) \\ \hline Relevant Ltd. & 752 & 3,800 & 0.0 & 1.702 & 23 & 42 \\ ABJInc.OpusSoftware & 843 & 2,150 & 6.5 & 2.800 & 23 & 24 \\ Opt.Ltd.Pvt. & & 972 & 13.0 & 3.400 & 23 & 13 \\ \end{tabular}