capital Budgeting

2. Consider the following information based on firms that are in a single line of business: Company name A B. Equity beta 1.6 0.8 1.3 0.7 1.1 Debt in millions $320 $365 $1,447 $2,332 $334 Equity in millions $461 $5,186 $3,811 $1,456 $314 Market risk premium 4% 5% 6% 4% 4% Assuming a marginal tax rate of 34%, risk-free rate is 5%. a) Calculate the asset beta for each firm. b) Calculate the cost of capital for each firm