QUESTION 4 Step 1-Calculate Industry Average Data 1.2+1.5+1.6 33+0.25+0.2 b D 1+0.28 1.1172 Step 3-Regear Unlevered Proxy beta Note: The project's debt-to-equity ratio is $40000: $60 000 or 2: 3(0.67) E 1.117+0.6 18657241.86July 2003 QUESTION 4 Step 1 - Calculate Industry Average Data 1 . 4 3 3 1 . 2 1 . 5 1 . 6 b LP = + + = 0 . 2 7 6o r 0 . 2 8 3 0 . 3 3 0 . 2 5 0 . 2 5 D p - E p = + + = Step 2 - Degear Levered Proxy Beta 1 . 1 1 7 2 1 0 . 2 8 1 . 4 3 E D 1 b b p p LP UP = + =         + = Step 3 - Regear Unlevered Proxy Beta Note: The project’s debt-to-equity ratio is $40 000:$60 000 or 2:3 (0.67).   = 1 .8 6 5 7 2 4o r 1 .8 6 6 = 1 .1 1 7 21 + 0 .6 7 E D b = b 1 + j j j UP        