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A firm has two divisions, Retail and Production. The firm's overall asset beta is 1.2, and that of the Retail division is 1.5. Almost
A firm has two divisions, Retail and Production. The firm's overall asset beta is 1.2, and that of the Retail division is 1.5. Almost 60% of the firm's assets are in Retail division. If the target debt ratio of Production division is 25%, the risk-free rate is 4% and the (expected) market risk-premium is 6%, what is the Production division's cost of equity?
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Microeconomics
Authors: David Besanko, Ronald Braeutigam
5th edition
1118572270, 978-1118799062, 1118799062, 978-1118572276
