Question: A compary is going to open a new division. The division will be financed with $1 million in debt and $3 million in equity. The
A compary is going to open a new division. The division will be financed with $1 million in debt and $3 million in equity. The tax rate is 15% for all firms. The rick-free rate is 1% and market portfolio return is 7%. The yield on the division's debt is 4%. The information on the relevant pure play companies is given below: What is the average of the project betas of the pure play forms
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