Key facts and assumptions concerning Kroger Company, at December 12, 2007, appear below. Using this information, answer the questions following.
Facts and Assumptions
Yield to maturity on long-term government bonds	4.54%
Yield to maturity on company long-term bonds	6.32%
Coupon rate on company long-term bonds	7.50%
Market price of risk, or risk premium	6.30%
Estimated company equity beta	1.05
Stock price per share	$ 25.97
Number of shares outstanding	681.2	million
Book value of equity	$ 4,965	million
Book value of interest-bearing debt	$ 6,674	million
Tax rate	35.0%
Chapter 8 Problem 21
Information regarding Kroger Company, and four industry competitors is shown below, on December 12, 2007.
Company	Equity beta	Interest-Bearing Debt	Market value equity
Kroger Company	1.05	$ 6,674.0	$ 17,690.8
Safeway Inc.	0.49	5,897.9	15,236.3
Supervalu Inc.	1.17	8,936.0	8,054.3
Whole Foods Markets	1.16	760.9	5,762.1
Winn Dixie Stores Inc.	2.56	160.1	916.8	.
a.	Estimate the industry asset beta, weighting each company by its proportion of total market value of equity.
b.	Relever the industry asset beta to reflect Kroger's capital structure, and to make another (industry-informed) estimate of Kroger's equity beta.