Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron after the acquisition.

2. (20 points) Problem - beta after acquisition In 1984, Textron Inc acquired Avco Corp and at the time of the acquisition, the following information was available about the two companies: Company Levered beta Market value of equity Market value of debt Cash Marginal tax rate Textron Inc 1.16 $1.4 billion $150 million $43 million 46% Avco Corp 1.36 $1.3 billion $100 million $61 million 46% 2. (20 points) Problem - beta after acquisition In 1984, Textron Inc acquired Avco Corp and at the time of the acquisition, the following information was available about the two companies: Company Levered beta Market value of equity Market value of debt Cash Marginal tax rate Textron Inc 1.16 $1.4 billion $150 million $43 million 46% Avco Corp 1.36 $1.3 billion $100 million $61 million 46%