Your $500 million dollar firm is financed with $200 million debt and $300 million
equity. The beta of the debt is 0.2 and the equity beta is 1.0. If the firm retired all of its
debt and became 100% equity financed, what would the new equity beta be?

Question

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The Answer of Your $500 million dollar firm is financed with $200 million debt and $300 million
equity. The beta of the debt is 0.2 and the equity beta is 1.0. If the firm retired all of its
debt and became 100% equity financed, what would the new equity beta be?

Your $500 Million Dollar Firm Is Financed with $200 Million