Question: With this, you are then tasked with estimating an average cost of capital, for which you consider the following set of inputs: 2) Calculate the

With this, you are then tasked with estimating an average cost of capital, for which you consider the following set of inputs: 2) Calculate the cost of equity using the CAPM method under two different scenarios: a. Using Heinz' own beta b. Using the beta you obtained by applying the pure play method to industry's betas Debate question: would you consider reasonable to use industry's beta when Heinz beta is observable? Consider: 0 That you find the 10-year treasury yield to be a good approximation ofa risk-free rate 0 A market risk premium of 6% 0 That you find the tax rate paid by Heinz in 2012 an outlier and hence, you will use the average of 2011 and 2012 tax rate in your analysis. Debate question: what would allow you, as an analyst, to consider that the current tax rate is not representative for your analysis

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