Find the correct cost of capital for evaluating a new

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Conglomerate Company has a cost of capital, based on the CAPM, of 17%. The risk-free rate is 4% and the market risk premium is 10%. The firm has 3 divisions:

Weight

Division

Division Beta

1/3

Automotive Retailer

2.0

1/3

Computer Manufacturer

1.3

1/3

Electric Development

0.6

Find the correct cost of capital for evaluating a new generation of electrical equipment. Explain.

Reference no: EM13569431

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