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Checkers, a computer manufacturer, announces that it will be acquiring Hadara Software. You know the following: Checkers had a beta of 1.6 prior to the
Checkers, a computer manufacturer, announces that it will be acquiring Hadara Software. You know the following: Checkers had a beta of 1.6 prior to the merger. The firm has a market value of equity of $ 14 billion and $ 8 billion in debt outstanding. Hadara Software had a beta of 1.1 prior to the merger. The firm has a market value of equity of $ 8 billion and $ 4 billion in debt outstanding. Note: Checkers had bought Hadara with all debt, both firms have a 40% tax rate T-bond rate {trate) and the equity risk premium is 0.053. Please write your answers in decimals. What is the unlevered beta for Checkers? What is the unlevered beta for Hadara? What is the unlevered beta for the combined firm
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