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What is the beta of the acme assets

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Acme currently has a capital structure of 20% debt to total assets, based on current market values. The current debt is riskless and more debt can be taken on, up to a limit of 35% debt, without making the debt risky and losing the firm's ability to borrow at 3%, the risk free rate. The expected return on the market is 9% and the Beta of the company's equity is 0.8 (at the current debt level).

1) According to the CAPM, what is the expected rate of return on Acme equity?

2) What is the Beta of the Acme assets?

Reference no: EM13909740

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