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Your firm is planning to invest in a dairy company. MilkFest is an all-equity firm that specializes in this business. Suppose MilkFests equity beta is
Your firm is planning to invest in a dairy company. MilkFest is an all-equity firm that specializes in this business. Suppose MilkFests equity beta is 0.85, the risk-free rate is 4%, and the market risk premium is 5%. If your firms project is all-equity financed, what is your cost of capital?
a. 9.00%
b. 8.05%
c. 8.40%
d. 8.50%
e. 8.15%
f. 8.75%
g. 9.25%
h. 8.25%
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