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Crystal Retail is an all-equity financed chain of retail glassware stores. Harmann Goods produces glassware and is the primary supplier to Crystal. Crystal Retail has
Crystal Retail is an all-equity financed chain of retail glassware stores. Harmann Goods produces glassware and is the primary supplier to Crystal.
Crystal Retail has a beta of 0.86 while Harmann Goods has a beta of 1.78. The risk-free rate of return is 2.43% and the market risk premium is 5.3%.
What discount rate should Crystal Retail use if it considers a new project that involves the manufacturing of glassware?
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