Market risk premium-should you undertake the acquisition

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Reference no: EM131348597

Your firm has a beta of 2.2 and just paid a dividend of $2 that is expected to grow at 8%. You are considering an acquisition that would lower your beta to 1.8 and your growth rate to 6.5%. If the risk-free rate is 2% and the market risk premium is 5.5%, should you undertake the acquisition?

Reference no: EM131348597

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