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The beta of an all equity firm is 1 . 2 5 . If the firm changes its capital structure to 5 0 % debt

The beta of an all equity firm is 1.25. If the firm changes its capital structure to 50% debt and 50% equity, using 6% debt financing, then what will be the beta of the equity of the levered firm? Use a tax rate of 40%.
1.654
1.750
2.00
1.864
1.571
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