5. As part of its efforts at diversification, the Sherbert theater organization, producer of Broadway play is considering acquiring a movie theater chain. A prime acquisition candi date is Consolidated Cinemas, currently owned by a conglomerate, Tryon. Although Tryon has given Sherbert what it feels is an accurate forecast of expected cash flows from the ci ema chain, Sherbert would like to have its own estimate of the required rate of return to apply to these cash flows. The chief financial officer has acquired the following information on independently owned movie house chains Beta 1.70 Movie House NCO Theater, Inc. Worldwide/Global Screen Rocks Ultimate Theater DITA debe totales 0.50 2.50 --010 DITA" 0.40 0.10 0.50 0.75 64 Summary and Conclusions 173 1. Using a risk-free rate of 75% and a market risk premium of 83%, what is your est male of the cost of equity capital for Consolidated? b. What qualifications would you include with your estimate