24. (Appendix Question) The market value of Oswego Computers' total debt outstanding is $10 million. Further, the unlevered market value of Oswego is $40 million.

The firm's average corporate tax rate is 35%.

a. If the beta of the firm's debt is .40 and the beta of its equity is 1.20, what is the firm's beta?

b. If the firm borrows another $10 million and uses the proceeds to purchase an equivalent amount of its own equity, what will be the effect on the beta of its equity?