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You work for Coca - Cola and want to create an amusement park in downtown Atlanta. This new project is riskier than Coca - Cola's

You work for Coca-Cola and want to create an amusement park in downtown Atlanta. This new project is riskier than Coca-Cola's current business. Coca-Cola has an equity beta of 1.25, an optimal debt-to-equity ratio of 0.35 and their debt currently yields 7.5%(That is, the yield to maturity (YTM) on Coca-Cola's bonds is 7.5%.). Six Flags currently operates amusement parks across the United States. Six Flags has an equity beta of 1.8, a leverage ratio of 38%, and a YTM of 8.2%. If the current risk free rate is 5%, the expected return for the market is 13.5%, and the tax rate for both firms is 40%, what is the appropriate cost of capital that Coca-Cola should use to evaluate this new project?
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