The music division of Seagram's Inc. evaluates all new record proposals by calculating the NPV based on the Music Division's own cost of capital. The division's capital structure is composed of $250M of debt and $1.5B of equity. To help you, the CEO has identified a pure play music company, the EMI Group. EMI's equity beta is 1.25, they have $2B of debt, and their equity is worth $8B. Assume that the debt betas for both companies are zero and that the tax rate is 35%. What is the Music Division's equity beta? Options:

1.197

1.064

1.167 1.000