ABC Corp. is a firm with all-equity financing. Its equity beta is .80. The Treasury bill rate

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ABC Corp. is a firm with all-equity financing.  Its equity beta is .80.  The Treasury bill rate is 4 per cent and, and the market risk premium is expected to be 10 per cent.  What is ABC’s asset beta?  What is its weighted average cost of capital? The firm is exempt from paying taxes.
(a) What is ABC’s asset beta? 
(b) What is its weighted average cost of capital?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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