Using the data in Exhibits 1 and 2, estimate equity betas and asset betas for WFM, KR, SFM, and SVU using five years of returns (or from origination, in the case of SFM) and the value-weighted market index. How do the companies' asset betas differ? What might explain the differences in the companies' asset betas?

2. Estimate the cost of equity capital for WFM, KR, and SFM.

a. How does the estimated cost of equity compare to the average returns from the past 5 years?

b. How are expected returns different from average past returns?

3. Estimate WFM's weighted average cost of capital

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