You have been tasked to value Pacific Corporation, a private company, for its upcoming IPO. As part of the valuation, you have to estimate the required rate of return on equity based on the CAPM. However, you cannot estimate Pacific's sytematic risk due to the lack of historical price data. Therefore, you use the beta of Atlantic Inc., a publicly traded company that operates in the same industry and is compararable to Pacific in many aspects. The current corporate tax rate is 30%. Your analysis shows that Atlantic's stock beta is 1.18, but it is a highly leveraged company with 36.50% debt in its capital structure, whereas Pacific is very conservatively financed, with only 8.50% debt. You therefore adjust Atlantic's beta for use in Pacific's valuation through a delevering-relevering approach. a. What is the systematic risk of Atlantic's business operations (i.e., asset beta)? b. What is the approriate stock beta to use for Pacific, taking into consideration its leverage