Assume Company A that operates in the transportation equipme…
Assume Company A that operates in the transportation equipment industry and has an estimated equity beta of is planning to merge with Company B that operates in the trucking and warehousing industry and has an estimated equity beta of . At the time of the announcement of the merger, Company B’s equity was twice the market value of Company A’s equity. Estimate the combined firm’s equity beta after the merger, assuming that debt in the merged entity will be equal to the pre-merger debt of Company A and Company B combined and the merger is not expected to create or destroy value. Round your answer to two decimal places.