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The Pencil Company is currently all equity and has a beta of 0.8. The form has decided to move to a capital structure of one
The Pencil Company is currently all equity and has a beta of 0.8. The form has decided to move to a capital structure of one part debt to two parts equity. Because the firm is staying in the same industry, its asset beta should remain at 0.8.
Assuming a zero beta, what is the equity beta?
Round to one place past the decimal point as "X.X"
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