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Posted on Jul 20, 2024

The Oil Derrick has an overall cost of equity of 13.6 percent and a beta of 1.28. The firm is financed solely with common stock.

The Oil Derrick has an overall cost of equity of 13.6 percent and a beta of 1.28. The firm is financed solely with common stock. The risk-free rate of return is 3.4 percent. What is an appropriate cost of equity for a division within the firm that has an estimated beta of 1.18?

12.80 (Correct answer)

Could you please show me how to get these answers using a financial calculator as well if possible?

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