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6. You own a private firm in the industrial sector. Your publicly traded competitors have, on average, levered betas of 1.3 and an r-square of 25%. The average D/E ratio in the sector is of 0.25. Your firm targets a capital structure with a D/E ratio of 0.5 The tax rate in the economy if 0.25. Long-term bonds yield 4% and the risk premium is 8%. What is the unlevered beta of the sector? (4 points) A: 1.095 (approx.). a. What is the bottom-up levered beta of the firm? (3 points) A:1.51 (approx.). It is also acceptable to refer here instead the result already considering the impact of non-diversification in the beta (beta=3.02 aprox b. c. What is the cost of equity in your firm if i. You are fully invested in your firm. (4 points) A: 28.16%. ii. Your investment in the fim represents a relatively small amount of your total wealth. (4 points) A: 16.08%