Firm X has equity worth 20M and debt worth 10M. The firms debt is risk-free, and its equity has a beta of 2.0.

Firm Y is all-equity financed. The value of that firm is 10M. Firm Y has an equity beta of 1.0.

Firms X and Y merge and change their name to Firm Z. The merged firm will assume all of Firm Xs debt. After the merger this debt continues to be risk free and worth 10M.

Assume there are no taxes and no costs of financial distress. Also, the merger involves no synergy gains.

Compute the value of Firm Zs equity beta.