$$ GE has three operating divisions: GE capital $(50\%),$ GE Technology Infrastructure $(30\%)$ and GE Energy $(20\%).$ The CFO wants to estimate the cost of capital for each division, to help in capital budgeting.

$$ GE is financed $40\%$ by debt, with $\backslash$beta D $=\mathrm{.}2.$ The current interest rate is $7\%$ and the expected market return is $15\%.$

$$ The following three competitors have investments similar to those of GE$$s three divisions $($with debt practically risk$-$free$)$:

Company Equity Beta D$/($D $+$ E$)$ A $\mathrm{.}8\mathrm{.}3$

B $1\mathrm{.}6\mathrm{.}2$

C $1\mathrm{.}2\mathrm{.}4$

$$ What is the cost of capital for each division?

$$ What is GE$$s equity beta?