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Financial Forensics · End Term · 21 Dec 2025 · September 2025 term

Question 33: ABC Corporation operates in a volatile industry and has …

Question 33

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ABC Corporation operates in a volatile industry and has an equity beta (levered beta) of 2.2. Currently, the company is financed with 70% equity and 30% debt. The management is considering increasing its leverage by shifting to a 50% equity and 50% debt structure to fund a new project. The corporate tax rate is 25%. What is the company’s unlevered beta?

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Correct answer: 1.65 (accepted within ±0.05)

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Question 33 of 40 in the IIT Madras BS Financial Forensics (Financial Forensics) End Term paper sat on 21 Dec 2025, in the September 2025 term (Financial Forensics 18 Dec 25). It carries 1 mark.

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