Checkers, a computer manufacturer, announces that it will be acquiring Hadara Software. You know the following:

Checkers had a beta of 1 prior to the merger. The firm has a market value of

equity of $ 12 billion and $ 4 billion in debt outstanding.

Hadara Software had a beta of 1.5 prior to the merger. The firm has a market value

of equity of $ 12 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 0.083.

Please write your answers in decimals.

What is the unlevered beta for Checkers?

Answer for part 1

What is the unlevered beta for Hadara?

Answer for part 2

What is the unlevered beta for the combined firm?

Answer for part 3

What is the value of the combined firm?

Answer for part 4

What is the beta levered for the combined firm?

Answer for part 5

What is the cost of equity for the combined firm?

Answer for part 6