Company	Equity beta	Market Value of Debt	Market Value Equity
Sprouts	2.65	$3,900	$3,000
Village Market	1.95	$1,500	$7,100
			$10,100

a. Estimate the asset beta for both of the firms noted above, showing all of your work and each step.

b. To account for size differences, you are instructed to calculate a weighted average asset beta by using weights equal to the % market value of equity out of the total combined equity value of both firms above.

c. Assume your answer to part b is 1.35. Another company, NS, has a target D/E ratio of 1.25, which does not match either of the peer firms given differences in business maturity. Estimate NS's equity beta, given their desired D/E ratio.

d. NS estimates the current market risk premium is 5.5% and the 20 year treasury rate is 2.5% Estimate NS's cost of equity, given your beta estimate from step c.