Your company has two$$ divisions: One division sells software and the other division sells computers through a direct sales$$ channel, primarily taking orders over the internet. You have decided that Hewlett Packard is very similar to your computer$$ division, in terms of both risk and financing. You go online and find the following$$ information: Hewlett Packard$\text{'}$s beta is $1\mathrm{.}29,$ the$$ risk$-$free rate is $3\mathrm{.}95\%,$ its market value of equity is $$$$68\mathrm{.}975$billion$,$ and it has $$$$688$ million worth of debt with a yield to maturity of $6\mathrm{.}56\%.$ Your tax rate is $35\%$ and you use a market risk premium of $6\mathrm{.}42\%$ in your WACC estimates.

a$.$ What is an estimate of the WACC for your computer sales$$ division?

b$.$ If your overall company WACC is $10\mathrm{.}83\%$ and the computer sales division represents $33\%$ of the value of your$$ firm, what is an estimate of the WACC for your software$$ division?

Note$$: Assume that the firm will always be able to utilize its full interest tax shield