Old air inc. has been operating for several years. Its market-determined beta is 2.0, its market value capital structure is 60% debt, and its federal-plus-state tax rate is 40%. The risk-free rate is 7.0% and the required rate of return on the market is 15.0%. What is old airs asset (unlevered) beta?

a. 0.67 b. 1.05 c. 1.33 D. 1.67 E. 2.00 14)

In the previous question, what is Old airs financial risk premium? (assume its enlevered beta is 1.0)

a. 0.00% b. 1.50% c. 3.33% d. 7.20% e. 10.00%