Corporate Finance Quiz
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A firm with a 25% tax rate is considering a project in a new industry. A comparable pure-play firm in this new industry has an equity beta of 1.2, a debt-to-equity ratio of 1.0, and a tax rate of 35%. The project will be financed to maintain the firm's target debt-to-equity ratio of 0.4. What is the appropriate equity beta to use for this project's capital budgeting analysis?
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