Suppose a company uses only debt and internal equity to finance its capital budget and uses CAPM to compute its cost of equity. Company estimates that its WACC is 12%. The capital structure is 75% debt and 25% internal equity. Before tax cost of debt is 12.5 % and tax rate is 20%. Risk free rate is rRF = 6% and market risk premium (rm rRF) = 8%:

 
What is the beta of the company?

Answer rating: 100% (QA)

To calculate the beta of the company we can use the following formula Beta Companys WACC RiskFree ... View the full answer