Beta Questions Arias Software is a small software compary with 60 million shares outstanding, trading at $10 a share, and $400 milion in debt. You have estimated a regression beta of 1.62 for the firm using the last 5 years of data, during which period the firm had an average debt to equity ratio of 50%. The tax rate for the compony is 40%. Question 5 [2 paints] With the court settlement, the company's new debt to equity ratia is 1/6, and that the unlevered beta far the new campary structure is 1.6 [Again these are not necessarily answer to previous questionsl. what would be levernged beta for Arious. 1.761.251.60.95 Question 6 [2 paints] Now assume that Arios Saftware is awarded a court judgment of $1 billion from Microsoft for violation of software capyrights. Arios plans to use this money to pay a dividend of $250 millian, pay off $250 millicn of debt and use the balance to invest in the computer hartware business. What is the new weights far the campany's business between software and hardware? Software weight - (1/3): Hardware weight (2/3) Software weight - [1/4]: Hardware weight - [3/4) Software weight (2/3}, Hardware weight [1/3) Software weight - (1/2): Hardware weight - [1/2) Question 7 [2 paints] If the unlevered beta far computer hardware companies is 1.10 and the unlevered beta for Arios Software was estimated at 1.55 (Note: this is not necessarily the answer to the previaus questions). Assume that the weights far the Software and Hartware parts of Arias are equal [1/1) (Again, this not necessarily the answer to the previous questions]. What is the new unlevered beta for the new Arios Software company? 0.95 1.55 1.1 1.325 Question 8 [2 paints] Assuming that the regression beta is correct, estimate the correct levered beta todivy, given the firm's current debt to equity matio. 0.75 1.4 10 1.82 Beta Questions Arias Software is a small software compary with 60 million shares outstanding, trading at $10 a share, and $400 milion in debt. You have estimated a regression beta of 1.62 for the firm using the last 5 years of data, during which period the firm had an average debt to equity ratio of 50%. The tax rate for the compony is 40%. Question 5 [2 paints] With the court settlement, the company's new debt to equity ratia is 1/6, and that the unlevered beta far the new campary structure is 1.6 [Again these are not necessarily answer to previous questionsl. what would be levernged beta for Arious. 1.761.251.60.95 Question 6 [2 paints] Now assume that Arios Saftware is awarded a court judgment of $1 billion from Microsoft for violation of software capyrights. Arios plans to use this money to pay a dividend of $250 millian, pay off $250 millicn of debt and use the balance to invest in the computer hartware business. What is the new weights far the campany's business between software and hardware? Software weight - (1/3): Hardware weight (2/3) Software weight - [1/4]: Hardware weight - [3/4) Software weight (2/3}, Hardware weight [1/3) Software weight - (1/2): Hardware weight - [1/2) Question 7 [2 paints] If the unlevered beta far computer hardware companies is 1.10 and the unlevered beta for Arios Software was estimated at 1.55 (Note: this is not necessarily the answer to the previaus questions). Assume that the weights far the Software and Hartware parts of Arias are equal [1/1) (Again, this not necessarily the answer to the previous questions]. What is the new unlevered beta for the new Arios Software company? 0.95 1.55 1.1 1.325 Question 8 [2 paints] Assuming that the regression beta is correct, estimate the correct levered beta todivy, given the firm's current debt to equity matio. 0.75 1.4 10 1.82