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Icadeco has two divisions: Give, and Take. Give has assets valued at $350. It is expected to return 12% to Tradece, Its worst case loss
Icadeco has two divisions: Give, and Take. Give has assets valued at $350. It is expected to return 12% to Tradece, Its worst case loss is 25%. It holds debt of $200 which is guaranteed by Tradece Take has assets valued at $500. It is expected to return 10% to Tradeco. Its worst case loss is 18%. It holds debt of $300, which is guaranteed by Tradeco. Tradece has a cost of weighted average cost of capital of 7%, which it passes along to its subsidiaries. What is the Risk Adjusted Return on Capital for each of Give, Take, and Icadesa? (8 pts.) Which of Give or Take is more profitable, and why? (1 pt.)
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