What is an appropriate cost of capital for division a

Reference no: EM13281453

Miller Sisters has an overall beta of 0.79 and a cost of equity of 11.2 percent for the firm overall. The firm is 100 percent financed with common stock. Division A within the firm has an estimated beta of 1.08 and is the riskiest of all of the firm's operations. What is an appropriate cost of capital for division A if the market risk premium is 9.5 percent?

13.12 percent
13.96 percent
14.63 percent
15.77 percent
16.01 percent

Reference no: EM13281453

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