Question: 2. (20 points) Problem - beta after acquisition Firm A makes an offer to acquire Firm B. Using the information below answer the following

2. (20 points) Problem - beta after acquisition Firm A makes an

2. (20 points) Problem - beta after acquisition Firm A makes an offer to acquire Firm B. Using the information below answer the following questions: Firm B Levered beta Firm A 1.35 1.10 Market value of equity $3.5 billion $2.0 billion Market value of debt $500 million $250 million Cash $100 million $50 million Marginal tax rate 37% 37%

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