3. You work on Wall Street and it is your job to do the risk assessment of a restaurant chain. You found four companies that are similar in part to the planned business. The table describes the beta of the stock as well as the market value of the debt, shares and cash of the companies. BE 0.35 0.43 0.47 D ($ billions) 30 9 E($ billions) 150 40 1 15 Cash ($ billion) 0 0 0.5 0 McDonald's Starbucks Taco Darden 0 0.70 0 Assume the debt of the companies is riskless, the riskless rate is 4%, the market risk premium is 7%, and that there are no taxes. 2 A. (12 points) What is the implied risk (Beta) of the business of each of the companies? B. (3 points) If each of the companies fits in a similar way to the business you need to estimate what is the expected return of the new business? C. (3 points) On the assumption that the new business will be financed by one third of debt and two-thirds by shareholders' equity, what is the required return for the shareholders of the issued company? D. (2 points) Is the business risk of one of the comparable companies unusual? What do you think the reason for this is