Question
HD Oil has an overall cost of equity of 13.6 percent and a beta of 1.08. The firm is financed solely with common stock. The
HD Oil has an overall cost of equity of 13.6 percent and a beta of 1.08. The firm is financed solely with common stock. The risk-free rate of return is 3.4 percent. What is an appropriate cost of capital for a division within the firm that has an estimated beta of 1.18?
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Business Analysis And Valuation Using Financial Statements
Authors: Krishna G Palepu, Paul M Healy
4th Edition
032430286X, 9780324302868
