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Hubbard, an all - equity food manufacturing firm, is about to embark upon a major diversification in the consumer electronics industry. Its current equity beta
Hubbard, an allequity food manufacturing firm, is about to embark upon a
major diversification in the consumer electronics industry. Its current
equity beta is whilst the average equity of electronics firms is
Gearing in the electronics industry averages debt, equity.
Corporate debt is considered to be risk free.
Rm Rf corporation tax rate
What would be a suitable riskadjusted cost of equity for the new
investment if Hubbard were to be financed in each of the following
ways?
A By debt and equity
B Entirely by equity
C By debt and equity
D By debt and equity
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