AllCounty is financed with 25% debt and the rest equity. It has an equity beta...
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Finance
AllCounty is financed with 25% debt and the rest equity. It has an equity beta of 1.13 and a debt beta of 0. AllCounty's tax rate is 25%. If AllCounty issues debt to repurchase equity so that the new firm is now 45% debt, what will be its new equity beta? (Continue to assume the debt beta remains at 0.)
Answer: 1.54. Please show how to arrive at this answer.
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