As of September2012, Google(GOOG) had no debt. Suppose thefirm's managers are considering issuingzero-coupon debt due in 16 months with a face value of $162.1 billion, and using the proceeds to pay a special dividend. Google currently has a market value of $231.9 billion and therisk-free rate is 0.28%. Using an implied volatility =38.60%, answer thefollowing:

a. IfGoogle's current equity beta is 1.24, estimateGoogle's equity beta after the debt is issued.

b. Estimate the beta of the new debt.

(Note: Make sure to round all intermediate calculations to at least five decimal places.)