- = (Assume that the pro-tax cut UL UU will increase to 10%, if this allocation is made.) 16. You are helping First Global, an international bank, decide on the costs of equity it should be using t evaluate its various divisions. Currently, it has three divisions commercial banking, real estate, and investment banking. The betas of comparable firms in each division are as follows. (Riskfree rate = 7%.) Division Comparable Firms' Beta Commercial Banking 1.05 Real Estate 0.70 1.40 a. Estimate the costs of equity for each division. b. What would happen if you used First Global's beta of 0.95 to estimate the cost of equity for all three Investment Banking divisions? Refer to Chapter 8 Problem 16. Assume a riskless rate of 7%, a market risk premium of 5.5%. The cost of equity for the Investment Banking division is 14.70%. This statement is: True False Refer to Chapter 8 Problem 16. Assume a riskless rate of 7%, a market risk premium of 5.5%. If you used First Global's beta of 0.95 to estimate the cost of equity for the commercial banking division, you would incorrectly reject some projects within this division. True False