Pete's Pastries Corp is a supplier of baked goods to many large coffee chains. Pete's is considering a new division which would supply its customers with frozen drink mixes. Pete's Pastries has a Beta of 0.5, a before tax cost of debt of 8%, and finances its operations with 40% debt and 60% equity. The new division will have a debt to equity ratio of 3, with before tax cost of debt the same as the parent company Pete's has identified a company (MixMasher Inc.) that manufactures and sells frozen drink mixes as its sole business. The following data applies to this pure play company: B = 1.2, D/E ratio = 1.5 The tax rate for all companies/divisions is the same at 35% Market information: Return on government 3 month T-bill = 3%, Expected return on the TSX = 12% a) Determine the Beta that Pete's should use for its new division? b) Determine the cost of equity for the new division? c) Determine the weight of debt and the weight of equity to use in the WACC calculation for the new division. d) Determine the appropriate discount rate that Pete's should use when evaluating its new division