Suppose that you are considering expanding your business into airline industry and need to estimate cost of capital of your project. Risk-free rate and market risk premium are 1.5% and 8%. a. (7 points) Based on the data provided in the table estimate asset beta of the airline industry. b. (5 points) Estimate cost of capital for the project if it is financed with 40% equity and 60% debt. Assume that the debt is rated AAA and its YTM =1.8%. The tax rate is 30%. c. (3 points) Which betas - asset or equity - have greater dispersion of the values? Explain your findings. Suppose that you are considering expanding your business into airline industry and need to estimate cost of capital of your project. Risk-free rate and market risk premium are 1.5% and 8%. a. (7 points) Based on the data provided in the table estimate asset beta of the airline industry. b. (5 points) Estimate cost of capital for the project if it is financed with 40% equity and 60% debt. Assume that the debt is rated AAA and its YTM =1.8%. The tax rate is 30%. c. (3 points) Which betas - asset or equity - have greater dispersion of the values? Explain your findings