Assuming that there is an unlevered firm and a levered firm. The basic information is given by the following table.
Table 1: Information of the firms

Unlevered firm 
Levered firm 
EBIT 
10,000 
10,000 
Interest 
0 
3,200 
Taxable income 
10,000 
6,800 
Tax (tax rate: 34%) 
3,400 
2,312 
Net income 
6,600 
4,488 
CFFA 
0 
3,200 
Assuming that cost of debt =8%; unlevered cost of capital =10%; systematic risk of the asset is 1.5
Suppose that the firm changes its capital structure so that the debttoequity ratio is 1.0, then recalculate the systematic risk of the equity
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