8. You are analyzing the beta for Hewlett-Packard and have divided up the company into four broad business groups, with market values and betas for each group. Market Value Unlevered Business Group of Equity Beta Mainframes $2.0 billion 1.10 Personal computers 2.0 billion 1.50 Software 1.0 billion 2.00 Printers 3.0 billion 1.00 HP had $1 billion in debt outstanding. a. Estimate the beta for Hewlett-Packard as a com- pany. Is this beta going to be equal to the beta esti- mated by regressing past returns on HP stock against a market index. Why or why not? b. If the treasury bond rate is 7.5%, estimate the cost of equity for Hewlett-Packard. Estimate the cost of equity for each division. Which cost of equity would you use to value the printer division? c. Assume that HP divests itself of the mainframe business and pays the cash out as a dividend. Esti- mate the beta for HP after the divestiture. (HP had $1 billion in debt outstanding). TIC Problems de problems bekw, you can use a market risk premium of 5.5% for the T. Bond rate and 8.76% for the T. Bill rate, and a tax rate of She is specified