Use the following information to answer the questions in this concept review

General Systems, a computer manufacturer, announces that it will be acquiring FastWorks Software. You know the following

General Systems had a levered beta of 1.09 prior to the merger. The firm has a market value of equity of $12 billion and $16 billion in debt outstanding.

FastWorks Software had a levered beta of 1.30 prior to the merger. The firm has a market value of equity of $6.00 billion and $6.00 billion in debt outstanding.

If you were told that the combined firms levered beta will be 1.270 after the acquisition, how much debt did General Systems use to acquire FastWorks? [You can assume that General Systems will assume Fastworks existing debt]. Both firms have a 40.00%Tax rate.

Note: Answers are rounded to four decimal places and with a tolerance of 0.03 (i.e., if the correct answer is 0.6893 then any value between 0.6593 and 0.7193 is acceptable). I suggest sticking to found decimal places, especially in the first few steps of these problems.

1. What is the debt-to-equity ratio after the merger (decimal form)?
2. What is the debt-to-capital after transaction (decimal form)?
3. What is the dollar value of debt in the merged firm (in billions)?
4. What is the dollar value of debt in existing companies (in billions)?
5. What is the vew debt issued to finance the transaction (in billions)?

Please answer all the above questions