Question
WeCare HMO is evaluating a new project. It has a coefficient of variation (CV) of 5, while the HMO's average project has a CV of
WeCare HMO is evaluating a new project. It has a coefficient of variation (CV) of 5, while the HMO's average project has a CV of 2-3. The business's corporate cost of capital is 10 percent and the typical adjustment for project risk is 3 percentage points. What is the project cost of capital?
a. 7% b. 10% c. 13% d. 16% e. 19%
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Practical Financial Management
Authors: William R. Lasher
6th Edition
1439080496, 978-1439080498
