The management at FactoryVille, a packaging material manufacturing company, has decided to start producing smartphones with a significant new investment. They identify two companies, Apple and Samsung Mobile, as being smartphone producers. FactoryVille is an all equity firm and plans to finance the new investment with equity. They look at some figures and find out that Apple has equity worth $$600$B and $$40$B in debt. They calculate betas for equity and debt at $0\mathrm{.}88$ and $0\mathrm{.}04.$ Samsung Mobile, on the other hand, has equity and debt worth $$60$B and $$20$B$,$

with betas of $1\mathrm{.}6$ and $0\mathrm{.}3.$ Suppose the risk$-$free rate is $3\%$ and the expected market return is $9\%.$What$$s a reasonable discount rate that FactoryVille should use for their new line of smartphones?