Equity betas and debt and equity ratios

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ABC Inc. is evaluating a project. The ABC intends to use 20% debt in funding the project. ABC identifies 5 comparable companies with the following “equity betas” and “debt/equity” ratios. While the comparable companies have varying marginal tax rates ABC’s marginal tax rate is 25%. Company Equity Beta D/E Ratio Marginal Tax Rate A 1.38 0.25 25% B 1.65 0.55 30% C 2.11 0.75 35% D 1.54 0.50 30% E 1.83 0.60 30% ABC’s levered beta for the project (or project beta) is closest to ____. 1.24 1.47 1.55 1.35

Reference no: EM131560829

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