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Equity Beta: ABC Corp

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ABC Corp. is a firm with all-equity financing. Its equity beta is .80. The Treasury bill rate is 4 percent, and the market risk premium is expected to be 10 percent. What is ABC's asset equity beta? What is its weighted average cost of capital? The firm is exempt from paying taxes.

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Solution Summary

The asset equity beta and average cost of capital is calculated for ABC Corp.

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The asset equity beta of an all equity firm is same as the equity beta.
Beta (equity) = Beta ...

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