A company is going to open a new division. The division will be financed with $1 million

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A company is going to open a new division. The division will be financed with $1 million in debt and $3 million in equity. The tax rate is 15% for all firms. The risk-free rate is 1% and market portfolio return is 7%. The yield on the division's debt is 4%. The information on the relevant pure play companies is given below:

Pure Play Firm

Beta

Debt/Equity

1.5

0.6

0.8

0.2

What is the new division's WACC?

Posted Date: May 18, 2024 06:16 PM

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A company is going to open a new division. The division will be financed with $1 million

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