. Wrentham Inc. has two divisions of equal size. Division A has a beta of 0.93, while...
Fantastic news! We've Found the answer you've been seeking!
Question:
.Wrentham Inc. has two divisions of equal size. Division A has a beta of0.93, while Division B has a beta of 1.57. Wrentham has no debt, and is completely equity financed. The real risk-free rate is 6.5%, and the market risk premium is 5.3%. The cost of capital for Wrentham is 16%. The projects in indivision A are discounted at A’s required return, and division B’s projects are discounted at B’s required return. Calculate the cost of equity for the two divisions. (Do not round intermediate calculations).
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date: