San Gabriel Corp. recently considered divesting its Italian subsidiary but determined that the divestiture was not feasible.
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San Gabriel Corp. recently considered divesting its Italian subsidiary but determined that the divestiture was not feasible. The required rate of return on this subsidiary was 17 percent. In the last week, San Gabriel’s required return on that subsidiary increased to 21 percent. If the sales price of the subsidiary has not changed, explain why the divestiture may now be feasible.
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