Learning Objective: 14.08 Estimate the cost of capital ror a an a ivemed compy Section: 14.06 Project and company cost of capital 51 Assume that Expansion Ltd is a diversified company that is considering an expansion project in a mining division. The company has a target debt-equity ratio of 1:2 and this ratio will not be affected by the new project. The company's manager has identified Dig-it-out Ltd as a company with the same business risk as the new project (equity beta of 1.5),. Dig-it-out has a debt-equity ratio of 1:3. What is the beta estimate of Expansion Ltd? A. 1.69 B. 1.12 C. 1.5 D. 1.75 Learning Objective: 14.08 Estimate the cost of capital for a division of a diversified company Section: 14.06 Project and company cost of capital