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Business, 20.12.2019 02:31 ashleyd198308

Faris currently has a capital structure of 40 percent debt and 60 percent equity, but is considering a new product that will be produced and marketed by a separate division. the new division will have a capital structure of 70 percent debt and 30 percent equity. faris has a current beta of 1.1 but is not sure what the beta for the new division will be. amx is a firm that produces a product similar to the product under consideration by faris. amx has a beta of 1.6, a capital structure of 40 percent debt and 60 percent equity, and a marginal tax rate of 40 percent. assuming faris's tax rate is 40 percent, estimate the levered beta for the new product division.

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