Sonoja Health Care Inc. is regional company which operates 2 divisions: Pharmaceuticals, and Rehabilitation. The company is extremely profitable, and is considering a number of new projects as part of its planned expansion.

Pharmaceuticals

The Pharmaceutical division develops new drugs, with each new drug development taking an average of 10 years to complete.

Rehabilitation

Rehabilitation deals with patient care subsequent to hospitalization. This division is considering building a new physical unit over a period of one year to increase capacity

TABLE 1 - Divisional and Consolidated information

Business Segment	Debt/Equity ratio	Debt/Value ratio	Spread to Treasury	Effective tax rate	Assets (millions)
Consolidated	42.2%	29.7%	1.62%	35%	5.0%
Pharmaceuticals	46.0%	31.5%	1.60%	35%	2.3%
Rehabilitation	31.0%	?	1.80%	35%	?

TABLE 2 - INDUSTRY INFORMATION

INDUSTRY	DEBT/EQUITY RATIO	BETA
Pharmaceuticals	46.0%	1.90
Rehabilitation	25.0%	1.52

TABLE 3 - TREASURY INFORMATION

MATURITY	RATE
1-YEAR	4.54%
5-YEAR	4.61%
10-YEAR	4.84%

a) Calculate the Beta for each division, and the consolidated company.

b) Calculate the WACC for each division. The market risk premium is 5.1% and the statutory tax rate is 45%.