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Question 1044  leverage, capital structure, beta

A levered firm has only 2 assets on its balance sheet with the below market values and CAPM betas. The risk free rate is 3% pa and the market risk premium is 5% pa. Assume that the CAPM is correct and all assets are fairly priced.

Balance Sheet Market Values and Betas
Balance sheet item Market value ($m) Beta
Cash asset 0.5 0
Truck assets 0.5 2
Loan liabilities 0.25 0.1
Equity funding ? ?


Which of the following statements is NOT correct?