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Find what is the beta of the company

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Reference no: EM132741497

Problem 1: Assume a company uses only debt and retained earnings to finance its capital budget and uses CAPM to compute its cost of equity. Company estimates that WACC is 12% and the capital structure is 75% debt and 25% retained earnings. Before tax cost of debt is 12.5% and tax rate is 20%. Risk-free rate is 6% and market risk premium is 8%. What is the beta of the company?

Reference no: EM132741497

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