Suppose you are analyzing a new project for Air Canada. Since the company isn't publicly

traded, you will use comparative data from the North American Airline industry to estimate

the beta for Air Canada. The top $4$ companies according to Market Share are Delta Air

Lines $($DAL$-$US$),$ Southwest Airlines $($LUV$-$US$),$ United Airlines $($UAL$-$US$),$ and American Airlines

$($AAL$-$US$).$ A summary of each firm is provided below as at April $5,2024$:

Using the information provided, answer the following:

a$)$ Calculate the Levered Beta for Air Canada using the industry information provided

above, and Air Canada's target Debt$-$to$-$Equity ratio of $0\mathrm{.}60.$ Assume the same

statutory tax rate of $22\%$ applies to the four US companies as well as Air Canada.

b$)$ Assume Government of Canada Treasury Bills have a yield of $4\mathrm{.}00\%$ and the market risk

premium is $5\mathrm{.}50\%.$ Air Canada has a credit spread of $2\mathrm{.}50\%$ above Government of

Canada risk$-$free debt. Calculate Air Canada's Weighted Average Cost of Capital

$($WACC$).$ Show your answer to $2$ decimal places.