2. Caledonia Minerals Corporation's stock has a beta of 1.6. The company is considering the acquisition of another firm that has a beta of 1.2. Caledonia has a market value of $6 billion, while the other company has a market value of $4 billion. a) What is the new beta value for the combined firm? b) The current risk-free interest rate is 4%, and the market return is estimated as 10%. What is your estimate of required return by investors on Caledonia's stock before and after the merger? Caledonia is expected to pay a $1.00 dividend next year (i.e., D,-$1.00). This dividend is expected to grow at 6% annually for the foreseeable future if the merger is not completed. The merger is not expected to change next year's dividend payment but future dividends are expected to grow at 7% annually as a result of the merger. c) What is fair value estimate of Caledonia's stock prior to the merger? d) What is new fair value estimate of Caledonia's stock, assuming that the merger is completed? e) Would you recommend the acquisition? Why