XYZ Inc., a diversified conglomerate, is deciding whether to buy a copper mine. XYZ already owns some gold mines and has recently invested in the biotech industry. XYZs cost of capital is currently 10%. The following is a list of other companies for which market data are available.

As a simplifying assumption you can set all debt betas equal to zero.

What opportunity cost of capital should XYZ use for evaluating whether to buy the copper mine? Use a risk free rate of 7% and a market risk premium (rm-rf) of 8%.

XYZ Inc., a diversified conglomerate, is deciding whether to buy a copper mine. XYZ already owns some gold mines and has recently invested in the biotech industry. XYZ cost of capital is currently 10%. The following is a list of other companies for which market data are available. As a simplifying assumption you can set all debt betas equal to zero. What opportunity cost of capital should XYZ use for evaluating whether to buy the copper mine? Use a risk free rate of 7% and a market risk premium (rm-rf) of 8%