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What would the new levered equity beta be

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Sturgis Ironworks has a levered equity beta of 0.95. Assume a debt beta of zero. The firm's market value debt to equity ratio is 0.75.

Problem a. What is the firm's asset beta (also referred to as an unlevered equity beta) according to equation 12.3 in the text?

Problem b. If the firm increases its debt to equity ratio to 1.0, what would the new levered equity beta be according to equation 12.3 in the text?

Reference no: EM132962721

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