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Globex Corp. currently has a capital structure consisting of 35% debt and 65% equity. However, Globex Corp.s CFO has suggested that the firm increase its
Globex Corp. currently has a capital structure consisting of 35% debt and 65% equity. However, Globex Corp.s CFO has suggested that the firm increase its debt ratio to 50%. The current risk-free rate is 3%, the market risk premium is 7.5%, and Globex Corp.s beta is 1.10. If the firms tax rate is 25%, what will be the beta of an all-equity firm if its operations were exactly the same?
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