could borrow at 6.3 percent. You may assume these costs of debt are after any flotation costs the firm might incur. - The risk-free rate of interest on long-term U.S. Treasury bonds is currently 6.3 percent, and the market-risk premium has averaged 5.7 percent over the past several years. - The E\&P division adheres to a target debt ratio of 20 percent, whereas the pipeline division utilizes 30 percent borrowed funds. - The firm has sufficient internally generated funds such that no new stock will have to be sold to raise equity financing. a. Estimate the divisional costs of capital for the E\&P and pipeline divisions. b. What are the implications of using a company-wide cost of capital to evaluate new investment proposals in light of the differences in the costs of capital you estimated previously