Amazon's stock has a beta of 1.16. if Amazon acquires MGM at the end of 2020 (and purchases all liabilities as well), What would be its re-levered beta? Assume debt beta is 0 and tax is 11.8%. Assuming that the cost of debt does not change, how would the acquisition affect the WACC of Amazon?

MGM :

AMAZON.COM, INC CONSOLIDATED STATEMENTS Year Kaled Bomber 31. 33 m) investing activities neres demana) in cas, cash cuivalents and restricted cash 4. CASH BOUIVALINTS, AND RESTRICTED CASH, END OF PERIOD AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Yar dedember 31 2018 2019 141,915 S 160,408 s 90,972 120,114 232,887 280,522 2020 215,915 170,149 386,064 Net product sales Net service sales Total net sales Operating expenses Cost of sales Fulfillment Technology and content Marketing General and administrative Other operating expense (income), net Total operating expenses Operating income Interest income Interest expense Other income (expense), nel Total non-operating income (expense) Income before income taxes Provision for income taxes Equity method investment activity, net of tax Net income Basis eurings per share Diluted earnings per share Weighted-average shares used in computation of earnings per Share: Hasie Diluted 139,156 34,027 28,837 13,814 4.336 296 220,466 12,421 440 (1.417) (183) ( (1.160) 11,261 (1,197) 9 10,073 $ 20.685 20.14 5 165,516 40.212 35,931 18.878 5,200 201 265,981 14,541 812 (1.600) 200 (565) 13,976 (2,374) (14) 11,588 $ 23.46 S 5 23.01 5 233,307 58,512 42,740 22,008 6.668 ( (75) 363,165 22,899 555 (1,647) 2,371 1,279 24,178 (2,863) 16 21,331 42.64 $ 5 5 41.83 494 500 487 SOO 304 510 See accompanying notes to consolidated financial statements. 39 AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31 2019 2020 36,0925 18,929 20.497 20,816 96,334 72,705 25,141 14,754 16,314 225.248 S 42.122 42,274 21,795 24,542 112,733 113,114 37,553 15.017 22,778 321,195 ASSETS Current assets: Cash and cash equivalents 5 Marketable securities Inventories Accounts receivable, not and other Total current assets Property and equipment, met Operating leases Goochaill Ocher esser Total assets S LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ Accrual expenses and other Unearned revenue Total current liabilities Long term lease liabilities Long term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity Preferred stock, S0.01 par value Authorized shares - 500 Issued and outstanding shares-none Common stock, 50.0L pur value: Authorized shares-5.000 Issued shares-521 and 527 Outstanding shares-498 and 303 Treasury stock, con Additional paid-in capital Accumulated other comprehensive income (loss) Retained carnings Total stockholders' equity Total liabilities and stockholders' equity Sec accompanying notes to consolidated financial statements, 47,183 $ 32,439 8,190 87,812 39,791 23,414 12,171 72,539 44,138 9,708 126,385 52.57 31,816 17,017 S (1.837) 33,65A (986) 31,220 62,060 225,248 5 (1.837) 42.865 (180) 52,551 93.404 321,195 December 31, 2020 December 31, 2019 S S Assets Current assets: Cash and cash equivalents Accounts receivable, net Current income taxes receivable Other current assets and prepaid program rights Program rights, net Total current assets 284,109 490,310 1,988 40,290 162,956 979,653 243,189 609,170 1,040 30,468 147,001 1,030,868 Noncurrent assets: Accounts receivable, net Other assets and prepaid program rights Film and television costs and program rights, net Investments in affiliates Property and equipment, net Goodwill Other non-content intangible assets, net Total noncurrent assets 212,514 100,244 1,902,316 61,153 29,281 534,424 316,552 3,156,484 140,099 42,683 1,863,882 64,061 36,183 534,424 346,939 3,028,271 Total assets S 4.136,137 4,059,139 $ Liabilities and equity Current liabilities: Accounts payable and accrued liabilities Accrued participants' share Current income taxes payable Program obligations Corporate debt Advances and deferred revenue Other current liabilities Total current liabilities 344,903 66,585 9,892 61.675 237,436 91,014 7,179 58,264 5,154 86,726 50,957 536,730 4,000 114,563 22,512 624,130 74,197 167,266 21,393 Noncurrent liabilities: Accrued liabilities Accrued participants' share Deferred income taxes payable Corporate debt Advances and deferred revenue Other liabilities and program obligations Total noncurrent liabilities Total liabilities 1,981,289 9,690 94.606 2,348,441 2,885,171 142,180 174,960 31,762 1,822,648 5,485 28,584 2,205,619 2,829,749 Commitments and contingencies 791 790 Equity Class A common stock, S0.01 par value, 110,000,000 shares authorized, 79,162,612 and 79,046,798 shares issued, respectively, and 43,089,901 and 43,195,048 shares outstanding, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 36,072,711 and 35,851,750 shares, respectively Total MGM Holdings Inc. stockholders' equity Noncontrolling interests Total equity Total liabilities and equity 2,155,113 1,094,160 (29,838) (1,969,938) 1,250,288 678 1,250,966 4,136,137 2,141,650 1,065,435 (26,540 (1,953,328) 1,228,007 1,383 1,229,390 4,059,139 S