The music division of Seagram's Inc. evaluates all new record proposals by calculating the NPV based on the Music Division's own cost of capital. The division's capital structure is composed of $500M of debt and $1.5B of equity. To help you, the CEO has identified a pure play music company, the EMI Group. EMI's equity beta is 1.125, they have $2B of debt, and their equity is worth $4B. Assume that the debt betas for both companies are zero and that the corporate tax rate is 30%. 

What is the Music Division's equity beta?

Answer rating: 100% (QA)

Since beta of debt in both the companies is 0 Unlevered Beta Levere... View the full answer