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General Systems, a computer manufacturer, announces that it will be acquiringFastWorks Software. You know the following General Systems had a beta of 1.20 prior to

General Systems, a computer manufacturer, announces that it will be acquiringFastWorks Software. You know the following General Systems had a beta of 1.20 prior to the merger. The firm has a market value ofequity of $ 10 billion and $ 4 billion in debt outstanding. FastWorks Software had a beta of 1.40 prior to the merger. The firm has a market valueof equity of $ 8 billion and $ 1 billion in debt outstanding.Both firms have a 40% tax rate.a. Estimate the unlevered beta of the combined firm. ( 2 points)b. If you were told that the combined firms levered beta will be 1.52, after the acquisition,how much debt did General Systems use to acquire FastWorks? [You can assume thatGeneral Systems will assume Fastworks existing debt] (4 points)

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