2. (20 points) Problem - beta after acquisition In 1984, Textron Inc acquired Avco Corp and at the time of the acquisition, the followin information was available about the two companies: a. (5 points) Compute the unlevered beta for each firm. unlereradbeta=1+(1taxrate)(D/E)leveradbetd=1+(10.46)(150/400)1.16=1.097 b. (5 points) Compute the unlevered beta corrected for cash for each firm. c. (5 points) Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron after the acquisition. d. (5 points) Textron borrowed $1.3 billion and assumed Avco's debt. Compute the levered 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 followin information was available about the two companies: a. (5 points) Compute the unlevered beta for each firm. unlereradbeta=1+(1taxrate)(D/E)leveradbetd=1+(10.46)(150/400)1.16=1.097 b. (5 points) Compute the unlevered beta corrected for cash for each firm. c. (5 points) Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron after the acquisition. d. (5 points) Textron borrowed $1.3 billion and assumed Avco's debt. Compute the levered beta of Textron after the acquisition