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Currently, company a has a beta of 1.56, D/S ratio of 0.8 and tax rate of 35%. This company is planning to increase its debt,
Currently, company a has a beta of 1.56, D/S ratio of 0.8 and tax rate of 35%. This company is planning to increase its debt, and have a ratio D/S=1.2. If the tax rate remains unchanged, what will be this companys new beta? (Hint: first find unlevered beta, then using Hamada equation find the new beta.)
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