Boco Ltd, an all equity confectionery firm is about to engage in a major diversification into consumer electronic industry. Boco equity beta is 1.4, whilst the average equity beta of the electronic industry average is 1.5. Gearing in the electronic industry averages 35% debt and 65% equity. Corporate debt is risk free. Returns on the market are 20%, risk free return is 10% and corporate tax rate is 30%. Required What would be a suitable discount rate for the new investment if Boco Ltd were to finance the new project in each of the following ways? a. Entirely by equity b. By 40%debt and 60% equity