A software company Crowd strike (CRWD) is planning to acquire another software company Firewall. The market cap for CRWD is $30 billion. CRWD does not carry any debt and the beta is 1.2. Firewall has a market cap of $16 Billion. It also has no debt but the beta is 1.6. Estimate the levered beta for CRWD after the merger if CRWD raised debt financing to fund this deal. 40% of the acquisition price came from debt. The marginal tax for CRWD is 21%.

Answer rating: 100% (QA)

To estimate the levered beta for CRWD after the merger well use the Hamada equation which relates ... View the full answer