Consider the following data for five metal producers in mid-2009 (all numbers are made-up for the purpose of the exercise): Market Capitalization (mm) Total Enterprise Value (mm) Equity Beta Debt Rating Company Shougang Group (China) 4500 8000 B Southern Copper (USA) 3800 7200 1.3 AAA 0.9 BBB US Steel (USA) Rusal (Russian Aluminum) 2400 1500 3800 4400 1.75 BB Suppose you were considering expanding your business into metal production, and need to estimate cost of capital of your project. You estimated that applicable risk free rate is 3% and market expected return is 3%. a. Estimate asset beta for the metal production industry. b. Compute cost of capital of the project if it is going to be 100% equity financed. c. Which betas have more dispersed values - equity betas or asset betas? Why? Explain