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The Singer Company is an all - equity firm. The equity has a beta of 1 . 2 and a total market value of $

The Singer Company is an all

-

equity firm. The equity has a beta of

1.2

and a total market

value of $

500

million. Suppose the firm repurchases $

100

million of stock and replaces

it with risk

-

free debt

(

.

.

betaD

= 0) .

What is the beta of the stock after the refinancing?

(

Assume the MM propositions hold.

)

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