Calculate balfor asset beta-the project equity beta

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1. Acme, Inc., is considering a project in the food distribution business. It has a D/E ratio of 2, a marginal tax rate of 40%, and its debt currently has a yield of 14%. Balfor, a publicly traded firm that operates only in the food distribution business, has a D/E ratio of 1.5, a marginal tax rate of 30%, and an equity beta of 0.9. The risk-free rate is 5%, and the expected return on the market portfolio is 12%.

Calculate Balfor's asset beta, the project's equity beta, and the appropriate WACC to use in evaluating the project.

Reference no: EM132899110

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