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Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D , with

Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm
currently has four divisions, A through D, with average betas for each division of 0.9,1.3,1.4, and 1.5,
respectively. Assume all current and future projects will be financed with 20 percent debt and 80
percent equity, the current cost of equity (based on an average firm beta of 1.3 and a current risk-free
rate of 3 percent) is 11 percent and the after-tax yield on the company's bonds is 8 percent.
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