Question: Need 100% Correct and BEst answer only FY 64. Project Beta --- Unlevered Firm * The Capital of Jazz Ltd, an exclusive Software Support Service
Need 100% Correct and BEst answer only
FY 64. Project Beta --- Unlevered Firm * The Capital of Jazz Ltd, an exclusive Software Support Service provider to Bazz Ltd, is made up of 40% Equity Share Capital, 60% Accumulated Profits and Reserves. Jazz does not have any other clients. The sensex yields a Return of 14%. The risk-less Return is measured at 6.75%. 1. If the Shares of Jazz Ltd carry a Beta (Jazz) of 1.6, compute Cost of Capital, and also the Beta of activity support service to Bazz Ltd. 2. If there is another client, Kraze Ltd, accounting for 35% of Assets of Jazz Ltd, with a Beta of 1.40, what should be the Beta of Bazz Ltd, so that the Equity Beta of 1.60 is not affected? In such a case, what should be the Expected Return from Bazz Ltd and Kraze Ltd
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