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M18 J* Name Box 0 Savemart, which owns and operates grocery stores across the United States, currently has $50 million in debt and S100 million in equity outstanding. Its stock has a beta of 1.2. 2 It is planning a leveraged buyout, where it will increaseits debt/equity ratio of 8. 3 | If the tax rate is 40%, what will the beta of the equity in the firm, be after the LBO,

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nlevered Bet Beto 1(1-tax hote) (debt Cvan wen -20 0 2 1-20 0-3 s 0.923 New Beda urden e ved Bela(14 (1-tax, ata) eus = - ta a x De bt 23(4)12 3 (104) o.9 2 3イ1.0%8 : epe(1.8149

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