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A levered firm has only 2 assets on its balance sheet with the below market...

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A levered firm has only 2 assets on its balance sheet with the below market values and CAPM betas. The risk free rate is 3% pa and the market risk premium is 5% . . Assume that the CAPM is correct and all assets are fairly priced. Selected Company Details Market value ($m) Item Beta Cash asset 0.5 0 Truck asset 0.5 2 Loan liabilities 0.25 0.1 Equity funding ? ? Which of the following statements is NOT correct? The: Select one: O a. Firm's market value of equity is $0.75m. and debt-to-assets ratio is 25%. O b. Equity beta is 1.3. O c. Equity required return is 10% pa. O d. Required return on debt is 3.5% pa. WACC before tax is 8% pa

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