About issuing some debt to repurchase equity

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Grainger didn’t have any debt on its balance sheet historically and the estimated beta was 0.60. The MVE of the firm is $17 billion and management is thinking about issuing some debt to repurchase equity. What would happen to Grainger’s beta if the firm issued $5 billion of debt to repurchase stock (which would result in a MVE of $12 billion)?

Assume a tax rate of 35%

Reference no: EM132019076

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