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Your company has a division on the Isle of Wight. The accounting beta of the division is 0.90. Your companys accounting beta is 1.2. Your

Your company has a division on the Isle of Wight. The accounting beta of the division is 0.90. Your companys accounting beta is 1.2. Your companys equity beta is 1.4. The firm has a value of 800M, debt of 200M, and cash and marketable securities of 50M. The risk-free rate is 2.5% and the GRP is 6%. What is the proper cost of capital for the division?

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