answer question 5 using the answers from questions 3 and 4 and the graph in the last image

Question 5: The OMC Board of Directors anticipates that OMC will hold a significant ownership stake in the newly independent Bauxite Division. Therefore, they are very concerned about potential bias in the Equity Beta calculations. They have asked you to prepare a brief presentation on bias, its inevitable effects, and how it can be controlled. Please provide a synopsis of your presentation below. Make certain to address the effects of Type | \& || statistica| errors. Question 3: As an independent public company, the Bauxite Division will have the same tax rate and capitalization ratios as OMC's. However, It is anticipated that the Bauxite Division's Cost of Debt will be 0.25% higher than OMC's. Below is a financial snapshot for OMC: Based upon this information and the Asset Beta you have already calculated, what is the expected Equily Beta for the Bauxite Division? 10.65=0.35 or 35% so the debt ratio is 0.35 for the Bauxite Division. 1.2(1+(10.40)(0.352.25%))1.2(1+0.600.352.25%)1.2(1+0.23625%)1.21.0023625Equitybota=1.202835 Question 4: Using the Capital Asset Pricing Model, what is the Cost of Equily Capital for the Bauxite Division? 2 Risk free rate of retum =3%, equity risk premium =7%, beta =1.2 3%+1.27% 3%+8.4% Cost of equity capital =11.4%