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Question-2: ABC Inc. is evaluating a project. The ABC intends to use 20% debt in funding the project. ABC thinks it can borrow at 5%. ABC identifies 5 comparable companies with the following equity betas and debt/equity ratios. While the comparable companies have varying marginal tax rates ABCs marginal tax rate is 25%. Company Equity Beta D/E Ratio Marginal Tax Rate A 1.38 0.25 25% B 1.65 0.55 30% C 2.11 0.75 35% D 1.54 0.50 30% E 1.83 0.60 30% At the time of evaluation, ABC analysts estimate risk free rate as 3% and EMRP as 5.5%. What should be ABCs unlevered and levered beta, cost of equity and weighted average cost of capital. YOUR SOLUTION: