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A company uses only debt and equity to finance its capital budget. The company uses...

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Finance

A company uses only debt and equity to finance its capital budget. The company uses CAPM to compute the cost of equity. The company estimates that WACC is 12%. The capital structure of the company is 75% debt and 25% equity. The following additional information is provided:

Risk-free rate- 6%;

Return on the market 14%;

Tax rate 20%; and

Cost of Debt 12.5%.

a) Compute the beta of the company?

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