You’ve identified a comparable firm for a new division you are heading up. The comparable has an equity beta of 1.6 and its debt is risk-free. The firm has equity with a market value of $30B, $6B in debt, and $10B in excess cash. The market risk premium is 5% and the risk-free rate is 2.5%. What is the appropriate discount rate to use for your division’s assets/projects?

Answer rating: 100% (QA)

To calculate the appropriate discount rate for your divisions assetsprojects we need to ... View the full answer