1. You are trying to estimate Cost of Capital for MGM Enterprises in question 1, and the EV change in question 2, the company that operates in two businesses, with the following breakdown:

The company is trading at its fair value, has no cash and $ 1 billion ($1000 in millions) in debt outstanding. The marginal tax rate is 30%. The risk free rate is 1.5%. ERP, 5.5%. Default risk is 2%

1. Estimate WACC. Hint: first calculate the weighted unleveled beta, then average levered beta for the company.

1. 	MOVIES	CASINOS
   ENTERPRISE VALUE IN MIILIONS	$1500	$1500
   UNLEVERED BETA	0.9	0.6

2. Now assume that MGM plans to sell its Casinos for its fair value, hold half the proceeds as a cash balance and use the remaining half to pay a special dividend. Estimate the value change in the company Hint: First, Estimate the levered beta after the transaction, calculate WACC and then the change in Enterprise Value. Default risk goes up to 3%. The marginal tax rate is 30%. The risk free rate is 1.5%. ERP, 5.5%.

What is the Enterprise Value change due to the restructuring?