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BetaCorp is a corporation that has two primary business lines personal hygiene and consumer off-the-shelf pharmaceuticals. We are estimating its levered beta for the purpose

BetaCorp is a corporation that has two primary business lines personal hygiene and consumer off-the-shelf pharmaceuticals. We are estimating its levered beta for the purpose of determining its cost of equity. The personal hygiene subsidiary is worth USD 20 million while the consumer pharma subsidiary is worth USD 30 million. The firm has a debt-to-equity ratio of 1. Assume that the tax rate for all firms is 30%. The risk-free rate is 7% and the market risk premium is 6%. The following information is for firms with comparable systematic risk: Comparable Firms Average Beta Average D/E Ratio Personal Hygiene 0.920% Medical 1.260% 

a. Estimate the bottom-up levered beta for Beta Corp.

b. Estimate cost of equity

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