When we compute the cost of equity capital for a project we assume that the the average risk of the firm's investments. Select one: a. non-systematic risk b. diversifiable risk c. standard deviation d. volatility e. market risk of the project is equivalent to Question 8 (10 marks) The Speaker Division has a production capacity of 86,000 speakers per year. The usual selling price is $194 per speaker, the variable costs are $136 per speaker, and the fixed costs (assuming production of 86,000 speakers) are $34 per speaker. The Computer Division is another division in the same company. It would like to buy 13,600 speakers from the Speaker Division. The Computer Division is presently purchasing speakers from an outside supplier at $175 per speaker, $14 of variable costs per speaker can be avoided on any sales from the Speaker Division to the Computer Division. The managers of the Speaker Division and Computer Division both wish to increase the profit of their own division. Required: Part 1. Assume Speaker Division is currently selling 86,000 speakers to the outside market for its usual selling price. What is the minimum acceptable transfer price to Speaker Division? A) $233 B) $180 C) $144 D) $252 ($400) F) $194 G) $175 Part 2: What is the maximum acceptable price to Computer Division for any purchases from Speaker Division? A) $0 B) $175 $136 D) $34 E) ($400) F) $214 $194 Part 3: Is it likely the managers of the two divisions will agree to a transfer? A) Yes B) No