Wholesource Foods has invested capital of $800 million. Their current capital structure is 25% debt and...
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Wholesource Foods has invested capital of $800 million. Their current capital structure is 25% debt and 75% equity, but are proposing a new capital structure of 40% debt and 60% equity. The current tax rate is 25%, and its unlevered beta is 1.15.In addition, the risk-free rate is 5% and market risk premium is 7%. Based on the Hamada equation, what would the firm's new beta be if it transitioned to the proposed capital structure? Wholesource Foods has invested capital of $800 million. Their current capital structure is 25% debt and 75% equity, but are proposing a new capital structure of 40% debt and 60% equity. The current tax rate is 25%, and its unlevered beta is 1.15.In addition, the risk-free rate is 5% and market risk premium is 7%. Based on the Hamada equation, what would the firm's new beta be if it transitioned to the proposed capital structure?
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