Multiple Choice
Miller Sisters has an overall beta of 0.79 and a cost of equity of 11.2 percent for the firm overall.The firm is 100 percent financed with common stock.Division A within the firm has an estimated beta of 1.08 and is the riskiest of all of the firm's operations.What is an appropriate cost of capital for division A if the market risk premium is 9.5 percent?
A) 13.12 percent
B) 13.96 percent
C) 14.63 percent
D) 15.77 percent
E) 16.01 percent
Correct Answer:
Verified
Correct Answer:
Verified
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