The mve of the firm is 17 billion and management is


Grainger didn’t have any debt on its balance sheet historically and the estimated beta was 0.60. The MVE of the firm is $17 billion and management is thinking about issuing some debt to repurchase equity. What would happen to Grainger’s beta if the firm issued $5 billion of debt to repurchase stock (which would result in a MVE of $12 billion)?

Assume a tax rate of 35%

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Financial Management: The mve of the firm is 17 billion and management is
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