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Company Risk Pusher currently has debt that accounts for 50% of its total capital source and the company's original unleveraged beta is 1.51 (before the
Company Risk Pusher currently has debt that accounts for 50% of its total capital source and the company's original unleveraged beta is 1.51 (before the company borrowed any debt). The company pays 40% tax. If the company decides to borrow more debt resulting in its total debt becoming 57.0% of total capital, how much riskier will the company become, measured by percentage increase in its beta? Note: keep two decimal points in your answer and only type the percentage points into the answer box. Type the % sign into the unit box. Your Answer: Answer units 1. Use the Hamada equation to calculate the beta with 50% debt. 2. Use the Hamada equation to calculate the beta with the new debt level. 3. Calculate the percent increase. 1. Calculate the percentage increase in beta
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