Question 6 (8 marks) ABC Corporation, which is an Australian firm, consists of two business sectors, food and casino, and the information of them is tabulated below: Business Levered Beta Average D/E ratio Market Value ($ million) Revenue ($ million) Food 150 120 0.7 40% Casino 80 25 1.1 30% The firm plans to sell 50% of Casino business and use the proceeds to invest in a new business, Steel, which has an unlevered beta of 1.2. The D/E ratio is stable at 0.25, and tax rate is 40%. a) What is the levered beta for ABC Corporation after the investment. (5 marks) b) What type of beta is estimated in question a)? Specify its advantages compared with the historical beta. (3 marks) Question 6 (8 marks) ABC Corporation, which is an Australian firm, consists of two business sectors, food and casino, and the information of them is tabulated below: Business Levered Beta Average D/E ratio Market Value ($ million) Revenue ($ million) Food 150 120 0.7 40% Casino 80 25 1.1 30% The firm plans to sell 50% of Casino business and use the proceeds to invest in a new business, Steel, which has an unlevered beta of 1.2. The D/E ratio is stable at 0.25, and tax rate is 40%. a) What is the levered beta for ABC Corporation after the investment. (5 marks) b) What type of beta is estimated in question a)? Specify its advantages compared with the historical beta