Notes: market risk premium of 5.5% for T. Bond Rate, and 8.7% for the T. bill rate, and tax of 40% where none is specified.

Question2: You are advising Zain that is planning to invest in multimedia project. The Beta for this mobile phone telecommunication provider is 0.85 and has a debt to equity ratio of 1.2, the after tax cost of debt is 4.25%. The multimedia business is considered to be much riskier than the phone telecommunication business; the average Beta for comparable firms is 1.55 and the average D/E ratio is 40%. Assuming tax rate of 40% and the riskless rate is 6.5% a- Estimate the unlevered Beta of being in the multimedia business b- Estimate the Beta and cost of equity if Zain finances this project with D/E of 60% C-Assume that Zain has created a division for this project with a D/E ratio of 50%. Estimate the Beta and cost of equity for the project