16. You are trying to estimate the cost of equity capital for a private firm that manufactures home appliances. You have managed to obtain betas for publicly traded firms that also manufacture home appliances.

Firm	Beta	Debt	MV Equity
Black & Decker	1.40	2,500	3,000
Whirlpool	1.50	2,900	4,000

The private firm has a debt/equity ratio of 25% and faces a tax rate of 40%. The publicly traded firms all face a 40% marginal tax rate as well. Current T-Bond yields are 4.0%, historical T-Bond yields have been 5.0%, and the market risk premium is 6%.