Two divisions that have different risk profiles
Course:- Financial Management
Reference No.:- EM13943001

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Your company has two divisions that have different risk profiles. Division A is less riskier than Division B. Since its less riskier, Division A's beta is 0.8 while division B has a beta of 1.2. Overall the firm’s beta is 1. If the risk free rate is 3% and the market risk premium is 6%, what discount rate should you use to evaluate the projects for Division B

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