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Find what is an appropriate cost of capital for division a

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Reference no: EM132580885

Question 1: Buy It Cheap has an overall beta of .88 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 1.34 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 5 percent?

Reference no: EM132580885

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