The beta of an all equity firm is 1.2. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.)
A) 1.2
B) 2.2
C) 2.4
D) None of the above

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The Answer of The beta of an all equity firm is 1.2. If the firm changes its capital structure to 50% debt and 50% equity using 8% debt financing, what will be the beta of the levered firm? The beta of debt is 0.2. (Assume no taxes.)
A) 1.2
B) 2.2
C) 2.4
D) None of the above

The Beta of an All Equity Firm Is 1