Create a proxy beta for the Z Corps new project (micro tech sector) given the BUs of 3 competitors. Since Z Corp has never invested in this sector, an industry average BU can be calculated, and then relevered with Z Corps D/E structure (for new project).

Unlevered Betas (BUs) of 3 micro tech firms :

Zin Tech : 1.6

Frango : 1.48

Phil Tech : 1.72

Using data above for the 3 firms, Calculate the Industry Average BU : ______[A] ________

Z Corp has a CAPITAL STRUCTURE of 40%D and 60%E (for project):

The BL = BU [(1 + (1 T)(D/E)]

CALCULATE the BL to be used in CAPM for new Project: ______[B]_________

WRITE your answers for [A] and [B] in the space provided

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