What is whistler corp asset beta

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Whistler Corp. has an equity CAPM of 1.2 and is financed 20% with debt. Its debt has a beta of 0.3 using the CAPM. Assume that the risk-free rate is 2%, the market risk premium is 7.7%, and the corporate tax rate is 21%.

(a) What is Whistler Corp.'s asset beta?

(b) What is Whistler Corp.'s expected asset return?

(c) If Whistler is thinking about buying Sea-to-Sky Inc., how should Whistler determine the appropriate discount rate for Sea-to-Sky Inc.?

(d) Sea-to-Sky Inc. has an equity CAPM of 1.5. Is it possible for Whistler Corp. to have a greater standard deviation of stock returns than Sea-to-Sky Inc.? Please explain your answer.

Reference no: EM131979160

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