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Ostin 14 arrows made up of two divisions. Division 1 comprises 50 percent of the www.Don2 makes up 50 percent of the company. The levered

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Ostin 14 arrows made up of two divisions. Division 1 comprises 50 percent of the www.Don2 makes up 50 percent of the company. The levered beta for the company as 1.3 and the company's debt/value ratio is 50 percent (you may assume that arvates for Division 1 and 2 are also 50 percent). If the risk-free rate is 4.0 percent, the arters premium is 10.00 percent, the marginal tax rate is 40 percent, and the before-tax cost of strs 100 percent then as you can calculate, the WACC for the company is 10.30 percent. Nowasume that other pure companies equivalent to Division 2 have an average unlevered beta of ose Using this proxy for Division 2's unlevered beta, you should be able to determine (back out) the univered beta tor Division 1. re-lever both betas, calculate the corresponding cost of equity, and hendetermine the appropriate WACC for each division. (For the purposes of levering and un- levering betas you may use the Hamada equations and assume that the beta for debt is equal to zero) Given this information, determine the appropriate WACC for Division 1. Arswer is decimal format, out to three decimal places. For examnla Ostin 14 arrows made up of two divisions. Division 1 comprises 50 percent of the www.Don2 makes up 50 percent of the company. The levered beta for the company as 1.3 and the company's debt/value ratio is 50 percent (you may assume that arvates for Division 1 and 2 are also 50 percent). If the risk-free rate is 4.0 percent, the arters premium is 10.00 percent, the marginal tax rate is 40 percent, and the before-tax cost of strs 100 percent then as you can calculate, the WACC for the company is 10.30 percent. Nowasume that other pure companies equivalent to Division 2 have an average unlevered beta of ose Using this proxy for Division 2's unlevered beta, you should be able to determine (back out) the univered beta tor Division 1. re-lever both betas, calculate the corresponding cost of equity, and hendetermine the appropriate WACC for each division. (For the purposes of levering and un- levering betas you may use the Hamada equations and assume that the beta for debt is equal to zero) Given this information, determine the appropriate WACC for Division 1. Arswer is decimal format, out to three decimal places. For examnla

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