Checkers is a firm with food and tobacco subsidiaries. The food subsidiary is estimated to be worth $20 billion while the tobacco subsidiary is estimated to have a value of $30 billion. Debt financing provides exactly half of the financing for the firms total asset value of $50 billion. The following table summarizes information on comparable businesses:

Business Levered Beta Debt to Equity Food 0.94 20% Tobacco 1.3 50% Assume that the tax rate for is 40% and the current risk-free rate is 6% with a market risk premium of 5.5%. Estimate the levered beta for Checkers.

Answer for part 4 Assume now that Checkers sells the food division for its $20 billion value. Estimate the beta for Checkers if the cash is used to pay down debt.