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Is is the symbol that represents the required rate of return on debt in the weighted average cost of capital (WACC) equation. 10. Adjusting the
Is is the symbol that represents the required rate of return on debt in the weighted average cost of capital (WACC) equation. 10. Adjusting the cost of capital for risk Divisional Costs of Capital Newtown Propane currently has only a wholesale division and uses only equity capital; however, it is considering creating marketing and retail divisions. Its beta is currently 1.3. The marketing division is expected to have a beta of 1.9, because it will have more risk than the firm's wholesale division. The retail division is expected to have a beta of 0.5, because it will have less risk than the firm's wholesale division. The risk-free rate is 2.8%, and the market risk premium is 5.2%. Based on this information, fill in the missing cost of capital information below: Wholesale division Marketing division Retail division If 65% of Newtown Propane's total value ends up in the wholesale division, 25% in the marketing division, and 10% in the retail division, then its investors should require a return of
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