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ESTA Inc. has an unleveraged beta of 1.63, the market value of equity of $70M and the market value of debt of $33M. The corporate

ESTA Inc. has an unleveraged beta of 1.63, the market value of equity of $70M and the market value of debt of $33M. The corporate tax rate is 25%. The expected risk premium on stock market is 7.3%, while the current interest rate on T-bonds is 3%. ESTA is planning a decrease in leverage by issuing stocks for $5M and repurchasing bonds for the same amount. Estimate new beta for this firm.

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