You are interested in estimating an asset beta for ABC Corp. You have determined that ABD Corp and ACD Corp are appropriate comparable companies. You have the following information:

Assuming that ITS are as risky as the firms operations and the debt is assumed to have a beta of 0, a reasonable estimate of ABCs asset beta is

• A.

  a = 0.675

• B.

  a = 0.85

• C.

  a = 0.805

• D.

  a = 0.88

Name Be Total Debt Mkt Cap Debt/Mkt Cap Tax rate 123 456 1.5 1.8 3000 4000 3000 2000 1.00 2.00 28% 28%