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Unlevering the Cost of Capital Problem Your firm is considering expanding its houschold products division. You identify Procter & Gamble (PG) as a firm with
Unlevering the Cost of Capital Problem Your firm is considering expanding its houschold products division. You identify Procter \& Gamble (PG) as a firm with comparable investments. Suppose PG's equity has a market capicalization of $144 billion and a beta of 0.57 . PG also has $37 billion of AA-rated debt outstanding with an average yield of 3.1%. Estimate the cost of capital of your firm's investment given a riskfree rate of 3% and a market risk-premium of 5%
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