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General Systems, a computer manufacturer, announces that it will be acquiring FastWorks Software. You know the following General Systems had a levered beta of 1
General Systems, a computer manufacturer, announces that it will be acquiring FastWorks Software. You know the following
General Systems had a levered beta of prior to the merger. The firm has a market value of equity of $ billion and $ billion in debt outstanding.
FastWorks Software had a levered beta of prior to the merger. The firm has a market value of equity of $ billion and $ billion in debt outstanding.
a Estimate the unlevered beta of the combined firm.
b If you were told that the combined firms levered beta will be after the acquisition, how much debt did General Systems use to acquire FastWorks? You can assume that General Systems will assume Fastworks existing debt Both firms have a Tax rate
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