Retirement of all of vitrex debt

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Assume that Hi-Tech LLC operates in the tech industry. The company has an estimated beta of 1.75 and is planning on merging with Vitrex, a company that operates hospices and has a beta of 1.25. At the time of the merger announcement, Hi-Tech was four times the size of Vitrex. Estimate the combined company's beta after the merger, assuming that the merger is not expected to create or destroy value and that all pre-merger debt of the two companies will remain outstanding after the merger. In addition, how would the post-merger beta change if the merger included the retirement of all of Vitrex's debt?

Reference no: EM133121566

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