1. Phillip Morris is reexamining the costs of equity and capital it uses to decide on investments in its two primary businesses, food and tobacco. It has collected the following information on each business: - The average beta of publicly traded firms in the tobacco business is 1.10 and the average debt-equity ratio of such firms is 2 . - The average beta for publicly traded firms in the food business is 0.80 and the average debt-equity ratio of such firms is .4. Phillip Morris has a beta of 0.95 and a debt capitalization ratio of 25%; the pre-tax cost of debt is 8%. The Treasury bond rate is 7%, the market risk premium is 5.5%, and the marginal corporate tax rate is 40%. a. Estimate the cost of capital for the tobacco business. b. Estimate the cost of capital for the food business. c. Estimate the cost of capital for Phillip Morris as a firm