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    Finding asset beta and WACC for a all-equity firm

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    ABC Corp. is a firm with all-equity financing. Its equity beta is .80. The Treasury bill rate is 4% and the market risk premium is expected to be 10%.

    a. What is ABC's asset (equity) beta?

    b. What is its weighted average cost of capital? The firm is exempt from paying taxes.

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    Solution Preview


    Firm's equity beta=0.80

    Firms is all equity financed,
    Debt weight=0
    Equity weight=1

    it's ...

    Solution Summary

    Solution describes the steps for calculating asset beta for all-equity financed firm. It also calculates WACC for such firm.