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QUESTION 2 A company uses only debt and equity to finance its capital budget. The company uses CAPM to compute the cost of equity and

QUESTION 2 A company uses only debt and equity to finance its capital budget. The company uses CAPM to compute the cost of equity and estimates that WACC is 12%. The capital structure of the company is 75% debt and 25% equity. The following additional information is provided: Risk-free rate- 6%; Return on the market 14%; Tax rate 20%; and Cost of Debt 12.5%. a) Compute the beta of the company

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