3. Please answer the followings for the pharmaceutical company according to the information below. (20 pts) Department Beta Market Value R&D 2.3 $200 million Clinical Research 1.8 $250 million Operations 1.3 $350 million a. What is the beta of the equity for the firm? (5 pts) b. If the risk free rate is 7% and the spread between the return on all stocks (market risk premium) is 7.5%, estimate the cost of equity for the R&D department? (5 pts) c. What is the cost of equity for the entire firm? (5 pts) d. Free cash flow to equity investors in the current year (FCFE) for the entire firm is $10.4 million and for the R&D department, it is $6.1 million. If the total firm and the R&D department are expected to grow at the same 9% rate into the foreseeable future, estimate the market value of the firm and of the R&D department. (5 pts)