5 Salas Ltd is an unquoted company that operates four divisions, all focused on single activities as
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5 Salas Ltd is an unquoted company that operates four divisions, all focused on single activities as shown in the table below. Salas identifies a proxy quoted company for each activity in order to calculate cut-off rates for new investment.
The risk-free rate is 7 per cent, and the expected return on the market portfolio is 15 per cent.
Required (i) Calculate the required return at each division.
(ii) Calculate Salas’ overall required rate of return.
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Corporate Finance And Investment Decisions And Strategies
ISBN: 9780273695615
5th Edition
Authors: Richard Pike, Bill Neale
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