Problem 4. It's 2010 and Pingo, a book publishing company, is looking to expand its operations into the audiobook business in the coming years. The beta for the company at the end of 2010 was 0.80, and the debt/equity ratio was 2 . The audiobook business is expected to be 40% of the overall firm value in 2016. The average beta of comparable audiobook firms is 1.40, and the average debt/equity ratio for these firms is 100%. The marginal corporate tax rate is 36%. a. Estimate the beta for the company in 2016, assuming that it will run its company at the same debt/equity ratio as it does today. b. Estimate the beta of the company in 2016, assuming instead that it maintains its current debt/equity ratio in its book publishing business, but finances its audiobook operations with a debt/equity ratio equal to that of comparable audiobook firms. Problem 4. It's 2010 and Pingo, a book publishing company, is looking to expand its operations into the audiobook business in the coming years. The beta for the company at the end of 2010 was 0.80, and the debt/equity ratio was 2 . The audiobook business is expected to be 40% of the overall firm value in 2016. The average beta of comparable audiobook firms is 1.40, and the average debt/equity ratio for these firms is 100%. The marginal corporate tax rate is 36%. a. Estimate the beta for the company in 2016, assuming that it will run its company at the same debt/equity ratio as it does today. b. Estimate the beta of the company in 2016, assuming instead that it maintains its current debt/equity ratio in its book publishing business, but finances its audiobook operations with a debt/equity ratio equal to that of comparable audiobook firms