GS, a computer manufacturer, announces that it will be acquiring FW Software. You know the following GS had a beta of 1.3 prior to the merger. The firm has a market value of equity of $ 12000000 and $ 4000000 in debt outstanding. FW Software had a beta of 2.5 prior to the merger. The firm has a market value of equity of $ 6000000and $ 1000000 in debt outstanding. Both firms have a 40% tax rate. If you were told that GS will use 1500000 debt to acquire FW What is the unlevered beta for GS What is the unlevered beta for FW What is the unlevered beta for the combined firms What is the beta levered for the combined firms

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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GS, a computer manufacturer, announces that it will
be acquiring FW Software. You know the following
GS had a beta of 1.3 prior to the merger. The firm
has a market value of equity of $ 12000000 and $
4000000 in debt outstanding.
FW Software had a beta of 2.5 prior to the merger.
The firm has a market value of equity of $
6000000and $ 1000000 in debt outstanding. Both
firms have a 40% tax rate.
If you were told that GS will use 1500000 debt to
acquire FW
What is the unlevered beta for GS
What is the unlevered beta for FW
What is the unlevered beta for the combined firms
What is the beta levered for the combined firms
Transcribed Image Text:GS, a computer manufacturer, announces that it will be acquiring FW Software. You know the following GS had a beta of 1.3 prior to the merger. The firm has a market value of equity of $ 12000000 and $ 4000000 in debt outstanding. FW Software had a beta of 2.5 prior to the merger. The firm has a market value of equity of $ 6000000and $ 1000000 in debt outstanding. Both firms have a 40% tax rate. If you were told that GS will use 1500000 debt to acquire FW What is the unlevered beta for GS What is the unlevered beta for FW What is the unlevered beta for the combined firms What is the beta levered for the combined firms
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