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Clearlake Capital Group (CCG) owns the Dodgers and Chelsea. The Dodgers baseball team makes up 25% of the value of CCG and the Chelsea soccer

Clearlake Capital Group (CCG) owns the Dodgers and Chelsea. The Dodgers baseball team makes up 25% of the value of CCG and the Chelsea soccer team is the other 75%. The asset beta for baseball is 1.4 and for soccer, it is 1. (Assume that there is no tax deductibility of debt.) 

 Suppose that CCG is planning an investment in the Dodgers that requires 100 million today and pays out 110 million in one year. The risk-free rate is 2% and the market risk premium is 6%. Should CCG proceed with this investment? (Point of clarification: CCG has no debt.)


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