A firm has 8 million shares outstanding, selling for £9.5 per share. The market value of debt and equity is 50,000 each, while the book value is 70,000 and 80,000 respectively. The firm faces a tax rate of 40% and beta ratio of 1.25. It is planning to issue £38 million in new debt and acquire a new business for that amount, with the same risk level as the firm's existing business. What will the beta be after the acquisition? Write your response using less than 600 words.
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